On January 24, 2025, the country experienced a wave of mixed emotions. This followed the President’s signing of the contentious Expropriation Bill of 2020 into law as the Expropriation Act 13 of 2024.
The President has not yet announced the commencement date. Consequently, the Act is not yet in force, and there is no indication of when this announcement will be made.
The new Expropriation Act versus the old one
The Act intends to replace the 1975 Expropriation Act. It adopts the language of Section 25 of the Constitution, which outlines the right to property and the conditions under which property may be expropriated.
The Constitution affirms that property – whether movable or immovable – cannot be expropriated arbitrarily. In support of this, the Act reiterates that any intended expropriation must serve a legitimate public purpose or public interest. It also sets out the factors that must be considered to determine suitable compensation.
The Act outlines the powers of the “expropriating authority”. This is defined as an organ of state or a person empowered by this or any other legislation to expropriate property. An example is the Minister responsible for Public Works and Infrastructure.
Nil compensation tested against the Constitution
The controversy surrounding the Act centers on the express power it grants the expropriating authority.
Specifically, the authority may offer nil compensation for the expropriation of “land” – meaning immovable property – for public interest purposes. This is after considering all relevant circumstances, including those listed in section 12(3) of the Act.
Many have debated the constitutionality of this provision. The Constitution prohibits arbitrary deprivation of land and requires compensation for expropriation.
Lawmakers attempted to amend the Constitution to clearly allow for no compensation. However, the National Assembly rejected the proposed amendment, and it never came into force. Now, only the courts can ultimately determine whether the wording of “nil compensation” (as opposed to “no compensation”) can withstand a constitutional challenge.
Mediation now the first port of call for disputes
If the expropriating authority and a disputing party disagree on the amount, timing or manner of compensation, section 19(1) of the Act allows them to refer the matter to mediation.
This represents a notable shift, as mediation was absent from the 1975 Expropriation Act. That Act instead provided for arbitration or court referral. Therefore, the new Act prioritises mediation and promotes the resolution of disputes through amicable negotiation.
However, if mediation fails or the parties choose not to mediate, then they may initiate court proceedings. This must occur within 180 days of the expropriation notice date.
New procedures relating to security bonds
The Act introduces time frames that affected parties, including property owners and mortgagees, must follow during the expropriation process. This is particularly relevant when there is a mortgage bond registered over the immovable property. The Act also details the procedure for such scenarios.
While the Act retains many provisions from the previous legislation about mortgage bond holders, it introduces a critical new requirement. It mandates that landowners and mortgagees must notify the expropriating authority of any compensation agreement within 30 days of taking possession of the expropriated land.
If no notice is received, the expropriating authority may deposit the compensation with the Master of the High Court. Although the Act provides for investment of these funds for the benefit of entitled persons (as the previous law did), the short notice period may raise administrative concerns for landowners and mortgagees.
However, section 23 allows extensions of deadlines for affected persons who show good cause and where it is reasonable.
Due to these tight deadlines and uncertainties in implementation, it is likely that courts will test and develop these time frames. This is especially true as parties attempt to comply with new procedural requirements.
Court rulings during the early stages of implementation will play a critical role. It is common – and necessary in a constitutional democracy – for courts to test and shape how new laws are applied.
A transformative development, whether welcomed or not
The Act introduces a comprehensive and structured expropriation process for public interest and/or purpose. By aligning the law with constitutional mandates and values, the Act strives to balance public needs with property rights.
Introducing mediation as the initial dispute resolution mechanism marks a significant cultural shift. It promotes amicable negotiation and avoids adversarial court battles. This approach is vital given the sensitive balance between public interest and private property.
Nonetheless, implementation will present challenges. Stakeholders will need to navigate them carefully, with courts playing a key role in resolving emerging disputes.
A deep dive into compensation and procedural provisions
Section 12(1) of the Act empowers the expropriating authority to determine and award just and equitable compensation for expropriation. These factors mirror those listed in Section 25 of the Constitution.
It is important to highlight that the compensation must find a balance between the public interest and the interests of those affected by the expropriation. Possible affected parties, besides the owners of the property, could, for example, be mortgagees and tenants of the property in question.
The factors listed under Section 12(1) are as follows:
- the current use of the property;
- the history of the acquisition and use of the property;
- the market value of the property;
- the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and
- the purpose of the expropriation.
In addition, the specific factors listed under Section 12(3) – the nil compensation provision – are:
- where the land is not being used, and the owner’s main purpose is not to develop it or use it to generate income, but rather to benefit from appreciation of its market value;
- where an organ of state holds land that it is not using for its core functions and is not reasonably likely to require for future activities in that regard, and where the organ of state acquired the land for no consideration;
- notwithstanding registration of ownership in terms of the Deeds Registries Act 47 of 1937, where an owner has abandoned the land by failing to exercise control over it, despite being reasonably capable of doing so;
- where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land.
When it comes to nil compensation, it is important to note several key points:
- the above factors are not exhaustive;
- the compensation still has to be just and equitable;
- it must be in the public interest; and
- it only relates to immovable property (“land”).
It must also be noted that certain factors may not be taken into consideration unless there are special circumstances where it would be just and equitable to do so.
These factors include the following:
- the fact that the property has been taken without the consent of the owner or holder of a right;
- the special suitability or usefulness of the property for the purpose for which it is required by the expropriating authority, particularly if it is unlikely that the property would have been purchased for that purpose in the open market;
- any enhancement in the value of the property, if such enhancement is a consequence of the use of the property in a manner which is unlawful;
- improvements made to the property after the date on which the notice of expropriation was served upon the expropriated owner or holder, except where such improvements were agreed to in advance by the expropriating authority, or where they were undertaken in pursuance of obligations entered into before the date of expropriation;
- anything done with the object of obtaining compensation for it; and
- any enhancement or depreciation in the value of the property, before or after the service date of the expropriation notice, which can be directly attributed to the purpose in connection with which the property was expropriated.
The Act also prescribes the procedure to be followed by the expropriating authority before any property may be expropriated.
This procedure includes, amongst other things, the following:
- The authority must obtain the consent of the owner or occupier of the land for a valuator and/or other third parties to enter the premises for inspection, surveillance, and valuation purposes. If consent is not granted, the expropriating authority must approach the court to grant access.
- The authority must publish a notice of intention to expropriate. This notice must contain details about the expropriation, the intended purpose of the property, and how compensation was determined. It must also be served on the property owner.
- The authority must consider any objections received in response to the notice of intention to expropriate.
- Where a decision in favour of expropriation has been made, the authority must publish a notice of expropriation. This notice must include details about the property and the compensation offered. It must also be served on the owner of the property.
| Belinda Scriba | Director | Dispute Resolution Practice | mail me | |  |
| Bridget Witts-Hewinson | Senior Associate | Real Estate Law Practice | mail me | |  |
| Claudia Grobler | Associate | Dispute Resolution Practice | mail me | |  |
