Picture: THINKSTOCK
Picture: THINKSTOCK

HOT on the heels of the Expropriation Bill of 2013 has come the little-noticed Property Valuation Bill of 2013, published on May 23 for comment within 30 days.

The Valuation Bill gives a new "valuer-general" an exclusive power to value property in cases of expropriation, land reform, or other acquisition (such as leasing) by the state. In this third instance, he must base his decisions on market value, determined on the willing buyer, willing seller principle.

Elsewhere, other criteria will apply.

Property is defined in the Valuation Bill as including "immovable property", "rights in … such property", and "any movable property which is contemplated to be acquired with the relevant immovable property". Where property is intended for expropriation, "property" has the same meaning as it does in the Expropriation Bill and thus extends from land to movable and other property.

These provisions will allow the expropriation not only of farmland, but also of farm equipment, vehicles, irrigation systems and livestock at a value to be determined by the valuer-general.

In addition, though the Valuation Bill is being introduced by Rural Development and Land Reform Minister Gugile Nkwinti, its provisions will extend beyond farms to land on which mines, factories or other businesses may stand. These enterprises could also be expropriated as going concerns — especially as the Expropriation Bill gives the power to expropriate to all national and provincial departments, municipalities and some 500 organs of state. Again, expropriation will take place at values decided by the valuer-general and without regard to consequential loss, including loss of income.

The office of the valuer-general is to be an "autonomous" juristic entity, which "must be impartial" and "exercise its powers without fear, favour, or prejudice". However, it will also be "accountable to the minister", while the valuer-general "must be appointed by the minister". The valuer-general himself need not be a registered professional valuer, though his deputy must be and also his staff in general. However, people with "nonvaluation qualifications, experience, and competence" may also be called on if needed to "assist with any valuation".

In deciding the value of property identified for expropriation or land reform, the valuer-general must take account not only of its market value but also of the four "discount" factors listed in the constitution, these being: the current use of the property; the history of its acquisition and use; the extent of direct state subsidy in its acquisition or capital improvement; and the purpose of the expropriation.

However, the valuer-general can develop further "criteria" and "policies" to be applied, while the minister is also empowered to make regulations laying down "the criteria for the determination of the value of property" expropriated by the state. An owner may "dispute the valuation" arrived at by the valuer-general, but "that dispute may not be used to delay, postpone or in any other way frustrate" the expropriation.

Like the Expropriation Bill — which allows the state to take both ownership and possession of property before it pays any compensation — the Valuation Bill empowers the government to proceed with expropriation irrespective of any dispute over the compensation due.

The owner may lodge an objection with the office of the valuer-general within 30 days. The valuer responsible for the particular valuation must "promptly" (no time limit is laid down) decide on the objection, adjust the valuation if he thinks it necessary and provide written reasons for his decision.

An objector who remains dissatisfied cannot approach the courts at this point but must instead apply for a review of this decision to a "valuation review committee", to be appointed by the minister on conditions to be decided by him. The minister is also to supply the review committee with its registrar and staff via secondment from the ranks of his officials. The review committee, which in practice will function under significant ministerial control, will be able to "determine its internal procedures" in disposing of reviews. This could raise further procedural hurdles to fair assessment and adjudication — especially as the committee will be able to close its meetings to the public "when deliberating on an issue before it".

No time limit is laid down within which the review committee must decide on an objection. The Valuation Bill does, however, state that "a decision of the review committee is final and binding on the parties and subject only to review by a court of law". This proviso has presumably been included to prevent the Valuation Bill from being struck down as unconstitutional for seeking to oust the jurisdiction of the courts.

In practice, however, the right to apply to court is likely to benefit only those with deep pockets — the few who can afford litigation to contest a valuation following a prolonged review procedure and after they have already lost both ownership and possession of their property to the state.

According to the explanatory memorandum on the Valuation Bill, the measure is necessary because "escalating land prices have contributed significantly to the slow pace of land redistribution" and raised questions about "the need for greater government intervention, including more willingness to use expropriation".

However, this justification is misleading, for other factors — including incompetence and corruption within Nkwinti’s department — are primarily responsible for the failures of land reform. In addition, this rationale implies that the Valuation Bill will apply solely to farmland when this is not the case.

According to Nkwinti, the introduction of the valuer-general is part of a move by the government "away from simple market mechanisms because they make things so costly". Moreover, when the state tried to expropriate in the past, "things would go to court and get contested and take a long time". The advantage of an institution like the valuer-general is that it will "make decisions quickly", he says.

The introduction of the valuer-general is also an important step in implementing the green paper on land reform, released by Nkwinti in September 2011. This policy document also seeks to: bar land reform beneficiaries from obtaining freehold title (they will be confined to leasehold); and introduce ceilings on land held in private ownership.

The proposed land ceilings will oblige commercial farmers with more land than the stipulated maximum to dispense with the "excess". Armed with both the Expropriation and Valuation Bills, the state could decide to expropriate such "excess" land at valuations decided by the valuer-general.

In combination with the Expropriation Bill and the green paper, the Valuation Bill threatens the property rights of all South Africans. It clearly forms part of the "second phase" of the ruling party’s national democratic revolution.

Part of its aim is doubtless to make it easier to achieve "state ownership of all land in the country", as the Congress of South African Trade Unions (Cosatu) has urged in order to "empower the democratic state to break the power of white capital". Cosatu will in fact be getting even more than it anticipated because so much property other than farmland will also be vulnerable to cheaper and quicker expropriation by the state.

Jeffery is head of special research at the South African Institute of Race Relations.