Lose your land, pay your bond

The law is clear: you are still li­able for your mort­gage af­ter your land has been ex­pro­pri­ated. For the banks it is ‘busi­ness as usual’ un­til there is fur­ther clar­ity.

The Citizen (KZN) - - Front Page - Amanda Wat­son – aman­[email protected]

ANC faces chal­lenge with its as­ser­tion it wanted to be the ar­biter of ex­pro­pri­a­tion.

Who pays your bond if your prop­erty is ex­pro­pri­ated with­out com­pen­sa­tion? The an­swer to that crit­i­cal ques­tion could still be months away.

As law­mak­ers still fo­cused on pub­lic hear­ings around the lat­est gazetted ver­sion of the draft ex­pro­pri­a­tion Bill, there is still no dead­line in sight.

But, what­ever hap­pens, the banks say they still ex­pect the debt to be set­tled.

While the first round of pub­lic hear­ings will take place from 20 to 24 Fe­bru­ary in Lim­popo and North­ern Cape, the ANC may have painted it­self into a cor­ner with its as­ser­tion it wanted to be the ar­biter of ex­pro­pri­a­tion in­stead of the courts as gazetted by the ad hoc com­mit­tee amend­ing sec­tion 25 of the con­sti­tu­tion.

Ned­bank ex­ec­u­tive head for reg­u­la­tory ad­vo­cacy and pol­icy Bon­gane Sibany­oni said: “Un­til there’s fur­ther clar­ity on this process, it is busi­ness as usual at Ned­bank. Bond re­pay­ments, which are the sub­ject of a con­trac­tual agree­ment, re­main due and payable.”

FNB said it con­tin­ued to mon­i­tor land re­form de­vel­op­ments.

“We re­main op­ti­mistic that the process will be man­aged in a re­spon­si­ble man­ner,” FNB said.

Absa said the par­lia­men­tary process to amend sec­tion 25 of the con­sti­tu­tion was “an on­go­ing process”. “We will make our con­tri­bu­tion to par­lia­ment when the op­por­tu­nity arises,” said Absa.

In­sti­tute for Race Re­la­tions (IRR) re­searcher Ni­cholas Babaya said be­cause there had been no leg­is­la­tion to change the con­tract law un­der which bonds were agreed to, banks had so far said noth­ing about what would hap­pen if bonded prop­erty were ex­pro­pri­ated.

“The po­ten­tial im­pli­ca­tions of this are dire for the fi­nan­cial sys­tem in South Africa,” Babaya said.

In De­cem­ber, through a par­lia­men­tary ques­tion, DA MP Michael Waters asked Min­is­ter of Agri­cul­ture, Land Re­form and Ru­ral De­vel­op­ment Thoko Didiza if gov­ern­ment was ne­go­ti­at­ing with banks to en­sure they would be com­pen­sated for any loan against an ex­pro­pri­ated prop­erty. Didiza’s an­swer was short: “No”.

SA HomeLoans tweeted: “In the event of ex­pro­pri­a­tion, the bond re­pay­ments would still re­main ow­ing to the mort­gage lender.”

Ac­cord­ing to Absa’s 2018 po­si­tion pa­per, the Bank­ing As­so­ci­a­tion of South Africa had found bank loans for agri­cul­tural, res­i­den­tial, com­mer­cial and in­dus­trial land came to about R1.4 tril­lion.

About R930 bil­lion was for res­i­den­tial loans, R300 bil­lion for com­mer­cial and in­dus­trial prop­erty, and about R129 bil­lion in agri­cul­ture.

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