The Expropriation Act 13 of 2024

The Expropriation Act 13 of 2024 (the “Act”) was signed into law on 20 December, 2024 and it aims to: (1) provide for the expropriation of property for a public purpose or in the public interest; (2) regulate the procedure for the expropriation of property for the purposes stated, including payment of compensation that is just and equitable; and (3) lastly, to identify instances where the provision of nil compensation may be just and equitable for expropriation in the public interest. The Act also repeals the Expropriation Act 63 of 1975 (the “1975 Act”).

Expropriation is not a new concept in South Africa, nor is it unique to the country. For decades, it has been used as a tool to empower organs of state to expropriate property for public purposes. The right to expropriate is embedded in the principles and framework of administrative justice which must comply with the provisions of the Constitution, 1996 (the “Constitution”). The right to expropriate property is further enshrined under section 25 of the Constitution, which provides that:

1. No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.
2. Property may be expropriated only in terms of law of general application: (1) for public purpose or in the public interest; and (2) subject to compensation, the amount, time, and manner of payment of which have either been agreed to by those affected or decided or approved by a court.

Whilst in many ways the Act mirrors some of the provisions under the 1975 Act, the Act introduces other additional procedural elements as well as the alignment of the right to expropriate not just for public purposes but also for the public interest (as detailed in the Constitution) as well as for expropriation for nil compensation. Public interest is defined as including the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources in order to redress the results of past racially discriminatory laws or practices. Public purpose is defined to include any purposes that are connected to the administration of any law by an organ of state, in terms of which the property concerned will be used by or for the benefit of the public.

Section 25 of the Constitution provides that the state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis. Furthermore, where a person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to legally secure tenure or to comparable redress. A person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to restitution of that property or to equitable redress. The state may not be impeded from taking legislative and other measures to achieve land, water, and related reform within the limitations as provided for under section 36(1) of the Constitution.

The Act, which is largely procedural in its nature, provides that the process of expropriation by an expropriating authority must follow due process, which involves:

1. Serving a notice of intention to expropriate on the owner, mortgagee, and holder of a right known to it at the time; and publishing such notice of intention to expropriate as required by section 22(2) of the Act;
2. Where the property is land, the expropriating authority must also deliver a copy of the notice of intention to expropriate to: (1) the Directors-General responsible for rural development and land reform, for environmental affairs, for mineral resources and for water and sanitation, and the accounting authority of any other organ of state whose functions and responsibilities will be materially affected by the intended expropriation; and (2) the municipal manager of the municipality where the property is situated, unless the expropriating authority is the municipal council.

Following any receipt of responses to the expropriating authority’s notice of intention to expropriate, consideration must be had to such statements, objections or submissions lodged in order to decide whether to proceed with the expropriation of the property. The expropriating authority may then decide to expropriate the property after the compensation, amount, time, and manner of payment have been agreed upon with the owner, mortgagee, or holder of a right, or approved or decided by a court. Where a decision has been taken to expropriate, the expropriating authority must serve a notice of expropriation which complies with the requirements of section 8(1) of the Act within a reasonable time. If a decision is taken not to expropriate, the expropriating authority must inform the owner, mortgagee, or holder of a right in writing within a reasonable time and publish a notice in the Gazette of the decision not to proceed as required by section 22(2) of the Act.

Unlike its predecessor, section 12(3) of the Act envisages that there may be instances where it is just and equitable for nil compensation to apply where land is expropriated in the public interest. This sees a move from the concept of ‘willing buyer and willing seller’ under the 1975 Act to one of justice and equity under the Act. It is important to note that section 25 of the Constitution already provides that the amount of compensation, time, and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected. This should be done by having regard to all relevant circumstances, which would include consideration of 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.

Depending on interpretation, it has been argued in public discourse that it can be said that the Constitution already envisages that compensation (if any) should take into account the circumstances of each case which may result in nil compensation.

Section 12(3) of the Act, provides for the circumstances where it is just and equitable for land to be expropriated for nil compensation in the public interest which includes but is not limited to:

1. Where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from the appreciation of its market value.
2. Where an organ of state holds land it is not using for its core functions and is not reasonably likely to require the land for its future activities, and the organ of state acquired the land for no consideration.
3. Where an owner has abandoned the land by failing to exercise control over it despite being reasonably capable of doing so.
4. 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.

The Act also provides that nil compensation may also be just and equitable when a court or arbitrator determines the amount of compensation in terms of section 23 of the Land Reform (Land Tenants) Act 3 of 1996 taking into account all relevant circumstances. In relation to land which is privately owned, more clarity will be required as to how an expropriation authority will objectively determine an owner’s main purpose in relation to their land and whether a property has actually been abandoned.

The Act does not apply to any expropriation that has been initiated prior to the commencement date of the Act. Its transitional arrangements provisions, do provide that in relation to the determination of compensation, parties may agree to the application of the Act to such expropriation in which case the relevant provisions of the Act will apply to the extent agreed. Whilst South Africa is still far from addressing the apartheid legacy of property injustices, and more reform is still required, only time will reveal whether the Act will be applied as envisaged in its preamble for the public interest.