The State of the Nation address and the debacle that it was, seems to have set an apt stage for the President’s announcement that foreign land ownership would no longer be tolerated and that right of title would be reduced to thirty year leases.

It is however not the first time that similar announcements have been made or alluded to but a brief analysis of the situation may reduce the panic somewhat.

The right of leasehold has existed in South African history and although for a very different purpose both legislative and otherwise, the rights bestowed by it were akin to land ownership as we know it and as we are accustomed. The ownership in the property is still bestowed upon the holder and banks will still grant mortgage bonds (obviously in the case of non-residents, this is subject to lending criteria as well). This means of property ownership is used in many countries in the world and will not be unique to South Africa.

In order to provide for leasehold as ownership, South Africa will need to pass legislation and practice notes which will take some time and will require public participation and input. It is not a fait accompli.

Having said that, the Minister for Rural Development and Land Reform was quoted more recently as stating that “the land that the president is referring to is productive land not residential property” as was initially thought to be the situation, and which also points to the fact that while not to be disregarded entirely, the matter is still very much in the thinking stage.

Further we have a Constitution which protects current owners of property and cannot remove land ownership retrospectively nor simply allow for the seizure of property without proper compensation.

The purpose of this short article is two fold – firstly, to inform you that it is premature for any of us to start speculating at this point as to the exact meaning of the President’s announcement and secondly, that despite shock tactics perhaps being intended by the President himself, the concept of ownership through leasehold is not new, is entirely possible and should not necessarily constitute a threat to foreign investment in South Africa.

Please do not hesitate to contact the writer if you or any foreign landowners, current and potential, would like to discuss this.