The terms of the Expropriation Bill, and much of the rhetoric emanating from the political leadership, threaten that expropriation could become a widely used means for the state to acquire property.
Although the Expropriation Bill indicates that mortgages will be terminated when expropriation takes place, it remains unclear what will become of the actual debt outstanding on the mortgages.
Representatives of the Banking Association of South Africa (BASA) previously indicated that following expropriation, the government should guarantee the repayment of bonds to the banks.
However, it seems unlikely that such costs could be met from a strained fiscus. So the question remains: does this imply that the banks’ clients will remain liable? In this scenario, what will happen to households currently liable for repayments on their home loans – having lost their property, will they be expected to continue servicing the debt?
The Institute of Race Relations (IRR) will be live streaming a discussion on Thursday 22 April and invited BASA on to the panel to put forward BASA’s views on the implications of the Expropriation Bill for bondholders; specifically what BASA envisages will happen to outstanding home loans on expropriated properties.
In its recent response, BASA declined the invitation, stating that ‘until the Expropriation Bill is adopted and there is some legislative certainty, we will not comment further’.
The IRR believes that it is inadequate for the country’s banking institutions to dodge these questions or to defer them until ‘certainty’ is achieved. The country’s banks have accepted the stewardship of their clients’ money and assets, and have profited by so doing.
Good corporate governance and ethics demand that they be prepared to express themselves on an issue that is of critical importance to their clients and society as a whole.
It must also be noted that South Africa’s banks, by virtue of their membership of the Agricultural Business Chamber (AGBIZ), endorsed EWC and the intrusions on property rights proposed by the Presidential Advisory Panel on Land Reform and Agriculture when the AGBIZ ‘representative’ signed the Panel’s report. To date, we are not aware of any bank having taken issue with this.
With or without BASA’s participation, Thursday’s livestream event will go ahead on YouTube, Facebook and the IRR website, with IRR analysts discussing expropriation policy. The event will be held at 7pm.
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