The Institute of Race Relations (IRR) has challenged the Minister of Public Works and Infrastructure, Patricia de Lille, to spell out the government’s position on who will be responsible for outstanding bond payments on properties taken under pending expropriation legislation.
The letter was delivered to De Lille offices yesterday.
It reads: ‘The South Africa Institute of Race Relations is a policy institute that has been in operation since 1929. The Institute has, as you know, taken a keen and active interest in the Expropriation Bill, which is currently before Parliament. Our position on this is a matter of public record. Since it appears likely that the Bill will be passed into law, we believe it is critical that its practical applications and implications must be set out.
‘A central issue is the question of bonds. Taking out a bond to purchase a home is for many households the largest outlay and the most important contributor to their financial security they will make over their lifetimes.
‘In view of this, we would like to pose the following question to you: in the event of expropriation under the pending legislation, what is the government’s position on the responsibilities of bondholders?
‘We are aware that the Bill suggests that with expropriation, bonds are terminated, but it is unclear who or which institution would assume liability for any funds owing. If, for example, a bonded property is expropriated without compensation or with very little (as a result of the various so-called ‘discount factors’ in section 12) where would liability for the outstanding debts reside? Is it the position of the government that dispossessed bondholders would remain liable for servicing their bonds, would this be a responsibility that would fall on the financial institutions? Or does the government envisage paying these debts itself?
‘The straitened conditions South Africa’s people find themselves in make these questions absolutely existential ones.
‘We would like to request a response from yourself by close of business on 13 April 2021. Please note that this correspondence is being released to the media, as will all subsequent communications.’