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PROPERTIES EARMARKED FOR LAND REFORM THROUGH THE LAND RESTITUTION PROCESS. REAL ESTATE INVESTMENT SERVICES BRANCH Presented by Ms S Subban. BACKGROUND.
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PROPERTIES EARMARKED FOR LAND REFORM THROUGH THE LAND RESTITUTION PROCESS REAL ESTATE INVESTMENT SERVICES BRANCH Presented by Ms S Subban
BACKGROUND • Historically, the National Department of Public Works (NDPW) released properties gratis for Restitution purposes, with an endorsement from the National Treasury (NT); • In 2006, the establishment of the Property Management Trading Entity (PMTE) was approved by Cabinet and the National Treasury, but the PMTE started being operationalized only in 2015/16; • The operationalization of the PMTE in 2015/16 meant migration of the DPW portfolio of State land to the PMTE balance sheet; • The current operating model of PMTE, where it is expected to operate like a fully fledged business, is affecting its liquidity and the ability to fund all its costs from its own generated revenue.
LEGISLATION GOVERNING THE STATE’S IMMOVABLE ASSETS • Sections 76(1)(k) and (l) of the Public Finance Management Act (Act 1 of 1999)(PFMA) state that the National Treasury must make regulations, concerning the alienation, letting or other disposal of State assets and gifts or donations by or to the State; • Thus, Treasury Regulation (TR) 21.3.1 states that the relevant treasury’s approval must be obtained before institutions offer or accept any gifts or donations of immovable property; and • TR 16A7.3 requires that any sale of immovable state property must be at market-related value, unless the relevant treasury approves otherwise.
..LEGISLATION PROPERTY VALUERS ACT,2014 • When the Office of the Valuer-General (OVG) values land at zero, the PMTE is required by law to transfer the land gratis. (See Property Valuations Act, 2014 (Act No.17 of 2014); • When the OVG ascribes a positive value to the land, Department of Rural Development and Land Reform (DRDLR) must provide further justification to PMTE and Treasury as to why the land could be transferred gratis; • This could have negative financial implications for the PMTE; • Treasury indicated that they will actively monitor the financial health of the PMTE and act to improve sustainability, via Treasury processes.
OUTCOME OF LEGAL OPINION FOR TRANSFER OF LAND FOR RESTITUTION PURPOSES • With the operationalisation of the PMTE, as well as the requirements of the PFMA, which informs the releasing of properties at market value and the Property ValuersAct, a legal opinion was sought to determine which Act supersedes the other; • The outcome of the recent Legal Opinion obtained is as follows: • The legal status of PMTE as a Trading entity does not warrant an interpretation or application of the relevant statutory provision so as to preserve for the PMTE an entitlement to market-value compensation of assets disposed of for purposes of land restitution. • Further, nothing in Treasury Regulation 19 imposes a legal obligation on a trading entity to dispose of assets only at market value; and • there exists no legal requirement for NT to approve a disposal of immovable property below market value. • The Department has informed National Treasury of these developments (requirements for market values and Treasury endorsement for Restitution purposes). • The legal opinion has assisted in accelerating the release process as National Treasury endorsement is no longer a requirement for restitution purposes.
PROPERTIES EARMARKED FOR LAND REFORM Summarised information on 539 claimed properties provided by DRDLR: • Total of 261 properties for settled claims, consisting of 141606.4352 ha; • Total of 278 properties for outstanding claims, consisting of 267636.92 ha; • In relation to the above, an action plan spanning over a three year period is presented in the following slides.
PROPERTIES EARMARKED FOR LAND REFORM continues… Following verification of properties undertaken by NDPW, out of the 261 settled claims 43 properties are under the custodianship of NDPW
PROPERTIES EARMARKED FOR LAND RESTITUTION PURPOSES continues… NDPW is part of the Inter- Ministerial Committee (IMC) on Land Reform The following programme for land reform has been presented to the IMC : • 98 (43-NDPW & 55 other custodians) properties are targeted for release before the end of the 2018/19 financial year by all custodians; • 100 properties are targeted for release before the end of the 2019/20 financial year by all custodians; • A further 100 properties should be released in 2020/21 financial year by all custodians; and • The North-West Province has been identified as the province that has the largest number of outstanding settled Restitution claims (93 properties). To fast-track the Restitution Programme; NDPW has engaged the Province to release of the identified properties.
PROPERTIES EARMARKED FOR LAND REFORM Ownership verification of 278 outstanding restitution claims was undertaken by NDPW, out of the 278 outstanding claims 158 properties are under the custodianship of NDPW. These will only be processed as Phase 2 once requests with supporting documentation are received from DRDLR.
RECOMMENDATION It is recommended that the Portfolio Committee notes the content of the presentation and the alignment to fast-tracking the land release for restitution purposes.
