Land expropriation without compensation could pose a significant risk to the banking sector.
That’s the warning from the Banking Association of South Africa, according to eNCA last night.
The association has told Parliament that market uncertainty around land rights has led to a marked decrease in the value of land-based property.
Basa says that there’s a reduced appetite from property buyers, which could destabilise the banking sector.
Banks have a R1.6-trillion exposure to land-based property in the form of mortgages.
The association says if a property that a bank has taken security over is expropriated, it could have a crippling effect on the borrower and the bank.