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Friday Feb 15, 2013

Government policy on foreign property buyers causes alarm

Property firm Seeff wants clarity on the government's proposed land policy which will stop foreigners from owning land in South Africa.

Seeff was responding to an announcement earlier this week by Minister of Rural Development and Land Reform Gugile Nkwinti that foreign land ownership will be restricted to leasehold once the bill is finalised and passed into law.

Seeff chairman Samuel Seeff has called for greater clarity, saying: "From what we understand, this is a decision taken at the Mangaung conference, but it is unclear whether this applies to state or privately owned land, or both. It is also not clear whether this extends to agricultural land only or also to residential ownership."

Nkwinti was quoted in a business newspaper earlier this week as saying: "All people who are foreign nationals will not lease land on a long-term basis. Privately owned land includes land which is owned by foreigners. We are still busy auditing all of that land," he said.

"When we've finished that, the policy of government, which will kick in at that point, remember, it's privately owned land - after we conclude that in cabinet, and Parliament promulgates the law, it will then say: 'All people who are foreign nationals will not own land, but will lease land on a long-term basis'."

The minister was responding to a question during a "dialogue" with farmworkers in Paarl.

Francois Marais, spokesman and FNB head of agriculture, said: "FNB has noted the comments relating to future ownership of agricultural land by foreign nationals but cannot provide an informed opinion until more clarity is provided relative to the matter. Once clarity is provided we will be able to provide a more accurate and informed opinion."

Seeff said the firm questioned the value of restricting private land ownership by foreign nationals as foreign property accounts for only 1 percent of all ownership.

"FNB's latest Property Barometer puts foreign property sales at about 3.5 percent of all sales and even at the height of the best property booms in decades ( between 2003 and 2007/8), foreign sales were just over 6 percent. These figures also do not take into account that foreigners also sell property, the net effect of which brings this percentage down to about half."

Seeff said it is a misconception that foreigners own the most expensive or best located properties in the country, even with regard to the luxury property market, where prices exceeded the R20-million mark, the percentage had remained at 3 to 4 percent.

"Aside from attracting foreign investment, foreign-owned property also generates residual income in the form of rates and taxes and other basic utility costs. Foreign property investors have also contributed to vital infrastructure development."

Seeff added that there was also a knock-on-effect when foreigners renovated their homes, creating work for those in the building industry.

"Foreigners mostly buy holiday homes and apartments and many spend the European winters in SA and bring foreign cash flow into the country.

"While UK and European buyers still account for the largest percentage, the past two years have seen a shift in interest from African buyers, many with business interests in the country."

Mtobeli Mxotwa, spokesman for Minister Nkwinti, said he could only comment after last night's State of the Nation Address which might include issues concerning land ownership by foreigners.

Cape Argus


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