LEASEHOLD EXPLAINED

1. LEASEHOLD EXPLAINED

2. INTRODUCTION Black Land Ownership was not allowed in white urban areas during Apartheid years and only black occupation rights were available in black urban areas.(townships) 1955 - 1968 30 – year leases on houses were obtainable 14 June 1968 Regulations Governing the Control and Supervision of an Urban Black Residential Area (GN R 1036) Site Permits Regulation 6 Residential Permits Regulation 7 Certificate of Occupation Regulation 8

3. Possible to register rights of 99-year leasehold over property in black urban areas. After the introduction of the 99-year leasehold scheme black people were able to obtain a registered real right to the property as well. 1978 The leasehold scheme did not prove to be successful – reason being that it was viewed as an inferior right and was not politically acceptable. This resulted in the Black Communities Development Act 1984 (Act no 4 of 1984) being amended in 1986 to provide for full ownership rights for black people in urban areas. 1986

4. Requirements for Registration of Ownership • Survey land and Register General Plan • Open Township Register (See Section 46(4) of the Deeds Registries Act No 47 of 1937). This is quite a lengthy process and took years to complete. For a leasehold to be registered only a surveyed and approved General Plan was necessary.)

5. Not possible to open Township Registers in all the areas. • This meant that for a long time only leasehold would be registered. • The Government tried to make leasehold more attractive, but to no avail. • (Perpetual 99-year leaseholds no “lease” payments etc)

6. On 1 January 1989 the Conversion of Certain Rights into Leasehold or Ownership Act, 1988 (Act 81 of 1988) was promulgated. R1036 regulations were repealed by this act and the Provinces were made responsible for the transfer of the occupational rights granted by reg 6 and 8 permits into leasehold or ownership. With the promulgation of the ‘Conversion Act’ and the consequent repeal of the R1036 Regulations, residential permits (regulation 7) were abolished; however the rights conferred by these permits were retained and protected by statute. 1988/1989

7. TORPS was a project performed in Gauteng in terms of which approximately 260 000 rental properties (Regulation 7) were transferred to the rightful owners in ownership or leasehold where ownership was not yet available. A number of former rented houses were regarded as FAMILY HOUSES and, although these houses were transferred in name of single individuals these transfers were subject to family agreements restricting the rights of the owners. TORPS

8. OWNERSHIP • most comprehensive of all real rights • giving the owner the right to use the property • the right to income derived from the property • the right to consume, dispose of and even destroy the property • It is unlimited in duration and is not subject to time limit • It is an independent right and is not dependant on or derived from any other right

9. LEASEHOLD • Leasehold is classified as a right inferior to ownership; • However, leasehold rights have undergone certain changes in South African law which makes it, except for certain technical legal aspects, the same as ownership. • The same rights that we find in the case of ownership exists for leasehold with regard to: • the registration of mortgage bonds • Sale of the right of leasehold; or • Testamentary; or • Intestate succession of the right of leasehold. • The ONE difference – that a right of leasehold was only valid for a period of 99 years, was also abolished.

10. As Township Registers were opened, it became necessary to devise a way of converting the leaseholds into ownership without incurring any additional expenses. • ULTRA (Upgrading of Land Tenure Rights Act 112 of 1991 states that when a Township Register is opened, all Registered Leaseholds in that township automatically convert to Ownership Rights. Registrars of Deeds will endorse leaseholds as ownership free of charge.