IRR to oppose Valuer-General’s ‘fixed formula’

Staff Writer | Mar 29, 2019
IRR opposed proposals made by the Valuer-General to parliament that will allow the State to seize property at a fraction of its value.

According to a statement released by the IRR yesterday proposals made by the Valuer-General to an ad hoc Parliamentary Committee will allow the State to seize property at a fraction of its value.  

 The Office of the Valuer-General is the state agency required to value all property targeted for land reform by the government and it recently briefed the Parliamentary Committee responsible for drafting an amendment to the Constitution to allow for expropriation without compensation.  

According to the IRR, as the Constitution currently stands one of the factors to be taken into consideration in deciding on ‘just and equitable’ compensation for expropriated property is the ‘current use of the property’. ‘Current use’ is not defined in Section 25. In principle, however, it revolves around the extent to which farms, holiday homes, mining land, or other assets are being fully used, for instance.

The Valuer-General proposes to redefine this as ‘current use value’ defined as the difference between cash inflows and outflows on a single day: the date on which the valuation is carried out.

According to the Valuer-General property targeted for seizure by the State must be valued according to a ‘fixed formula’ as follows: ‘value = current use value + market value, divided by two’.


IRR analyst Dr Anthea Jeffery explained that, “In other words, except where the ‘current use value’ is extraordinarily high - bringing a net income of close to the market value of the property on a single day - valuation for land reform purposes will not produce anything close to market value. Typically, the formula will value properties at half their selling price and residential properties - having no ‘current use value’ are particularly vulnerable.

According to IRR CEO Dr Frans Cronje, “The defence of property rights is the greatest policy priority for the IRR. Those rights are the basis of a functioning market economy and also the rule of law. The proposals of Valuer-General are destructive to investment and threaten South Africa’s future as a free and open society. If property rights are not completely secure South Africa will not draw the investment to stage an economic recovery. Endemic poverty, unemployment, and inequality will remain intact. It is for this reason that we have opposed EWC with such vigour and why we will oppose the ‘fixed formula’ with equal vigour. It is no exaggeration that secure property rights are a necessary condition for South Africa to have a future as a free and prosperous society”.  

 



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