Comments On The Spatial Planning And Land Use Management Bill, 2011 Of South Africa

The one problem I have with the wording of the Bill relates to the whole aspect of dealing with the value of property. Investors in property, which include banks through mortgage bonds, rely on property’s inherent value.  The Bill instructs that when Councils are required to make decisions, they should not allow themselves to be constrainted by the consideration that such decisions will impact negatively on the values of surrounding properties.  To me that sounds like a value-eroding instruction.

The South African economy is classified as being as being developmental in nature. In so saying, it is only logical that politicians could be expected to pursue policies that further the interest of rapid development. Property development is a highly risky endeavour in which significant sums of capital and time need to be injected in one fell swoop. Once the money is in the ground, there is no going back, as opposed to say equities, wherein investors can sell their shares or even invest small sums at a time . The exit strategy of property development is rather long term in nature. Therefore, the risk of value-erosion is a variable that needs to be managed very delicately.

The benefits that arise out of the concept of value in property assets are many and varied. Firstly, the tax base of any city based on the concept of value. Municipal rates and taxes are levied using calculations which have property value as the starting point. Government agencies such as the Revenue Services generate capital gains tax on the basis of value that has accrued to property assets over the years. Before the Treasury Department can approve a Public Private Partnership project, it is guided by value accruing to Government as one of the three, perhaps the most fundamental of considerations. Banks use the value accruing in property as collateral to extend credit to consumers. Without the confidence that value in the properties on which credit is being extended, bankers would be hard pressed to approve property loans. Very few people are wealthy enough to be able to purchase property for cash. Most people buy property on the knowledge that property is guaranteed to appreciate in value over time. An entire statutory body, called the Valuation Council is in existence, precisely for the purpose of regulating the value of property. Section 25 of the Constitution of The Republic of South Africa protects the market value of property. Even under conditions of expropriation, the State is still required by the Constitution to take value into account.

The Drafters of the Spatial Planning And Land Use Management Bill, 2011 Of South Africa should perhaps review their thinking with regards to property values and reconsider.

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About tshepomakhudu
I have a keen interest in all matters on property development, more particularly hotel development in South Africa.

5 Responses to Comments On The Spatial Planning And Land Use Management Bill, 2011 Of South Africa

  1. Randal Bostock says:

    Liked your comment on the new Spatial Planning And Land Use Management Bill, 2011 of South Africa. Maybe you could post more comment on the Bill in future? Also, any idea when the Bill will become law? Thanks for your blogs.

    • Hi Randal, thanks very much for liking my postings. I intend to post more comments with regard to the Bill in future. Unfortunately the Department of Rural Development did not incorporate an indicative programme on when the Bill will become an Act, and I could not reach the relevant people to provide me with that information for now. Also whilst scanning through the Bill I could not pick any dates. However judging by the amount of legacy legislation that will need to be repealed, my guess is that it will be quite a while still before this Bill becomes an Act. I will try contacting the Department again and if I can acquire it I will then post it on this blog. Thanks and best regards, Tshepo

    • Dear Randal, further to my earlier reply, I have had a discussion with Gavin Benjamin at the Department of Rural Development about the Bill. The Bill is under pressure to have become enacted by June 2012. This is because the Development Facilitation Act will cease to exist then, and as a result a replacement Act will have to be operational. Subsequent to current stage of comments, the Amended Bill will be approved by the Minister, after which it will be presented in the National Assembly. The NA will then conduct its own Public Participation exercise and forward it to the National Council Of Provinces which will in turn conduct its own PP process. After this stage the the Final Amendment will then be presented to Parliament for a final debate for the President to sign it into law. The timing seems very tight indeed. Should you require any further details please do not hesitate to contact Gavin on 012-312-9328

      • Randal Bostock says:

        Hi Tshepo, Thanks for the follow up information presented in your replies of Sept 5 and Sept 28. Really appreciate your efforts! Best regards, Randal

      • Hi Randal, it is my absolute pleasure…! Brgds, Tshepo

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