Zuma’s comments with regards to property at the State of the Nation 2015

Don’t Panic

Here is something to think about with regards to land ownership by foreigners as muted by President Zuma at SONA2015:

Learned and legal minds have been writing about this for some time now in South Africa and I thought I’d share some of their thoughts concerning this.

·         No reversals are possible – the administrative and logistics, costs and legal ramifications makes it impossible to reverse any transactions already done with foreigners. Property ownership is held in personal names, companies, trusts, partnerships, shareholdings etc and just to do Deed Searches on all these and then to determine/define whether the owner of the property is strictly a foreigner (without permanent residence, work permits, business interests in the country or a majority shareholder in the property owning company) and then after this to force reversal of ownership is a task that is simply impossible.

·         There is no law promulgated and adopted yet so deals can still occur to foreigners – to enact some type of law in this regard will probably take many, many years to achieve (if ever) and between now and then (if ever) the above would apply.

·         Belief is that if ever a law like this is passed, it would be constrained to agricultural land only or agricultural land up to a certain size but even then, the above two points still apply. Sectional titles, residential properties and commercial properties in all likelihood would be excluded. For commercial properties, this is no more apparent than the R80 billion Chinese developments in Johannesburg (label the 2^ndSandton) where construction has already began with the approval of government just recently – again the point that this can never be reversed.

·         In many countries around the world and including western countries, foreigners are also not allowed to own land unless they become citizens as well so it’s not that “whacked”. In fact in Europe now, many countries offer foreigners automatic citizenship if they acquire property or establish businesses there. The same could happen here to attract investors and in fact was said as such by the president this morning he implied that foreigners are welcome to buy here but they must also invest in businesses at the same time or become citizens and invest in businesses and not just own property to be used for vacations once a year and not add value – mmmm? you can debate this for yourself

·         As muted, if no ownership is given then long leases will be given to foreigners – again nothing new here and it happens all over the world and including western countries (99 year leases up to 999 year leases). These leases can be mortgaged by banks, are tradable, renewable in perpetuity, are transferrable to surviving spouses upon death and can be used as collateral (jokingly though, do we as humans ever own a property? – we merely exclusively occupy properties while we are alive and the properties will always still be there even after many generations have come and gone)

Look, the bottom line is there has to be some form of land ownership correction in South Africa and we must all accept that. Most commentators though believe that political rhetoric is the order of the day with this current government in order to appease the majority but at the end of the day concessions will be made mainly for agricultural and rural land reform.

 Sure this form of rhetoric does not help the situation so we must just manage it until all is made clear.

Managing it means continue as normal as nothing has legally changed and if sentiment is a problem right now, perhaps the above will help you communicate this to your foreign clients.

My take to clients would be BUY NOW before the law changes!!

All info provided by Rob Severin. For any other info, contact him.