Time for State to get off the fence on foreign property ownership
February 2006
JOHANNESBURG - "This is not the outcome we would have preferred, but at least it seems we will shortly have some finality on the issue of foreign property ownership in SA."
This was the reaction of Berry Everitt, MD of the Chas Everitt International property group, to the announcement today (subs:20 February) that Land Affairs Minister Thoko Didiza has been asked to impose a moratorium on the sale of any property to foreigners pending new legislation on the matter.
The moratorium was recommended by the committee that has been investigating foreign land ownership in SA since 2004, and follows statements made by President Thabo Mbeki during his recent State of the Nation address that the government would move soon to limit foreign ownership of SA property.
"We are disappointed of course," says Everitt, "since we believe that enacting legislation to limit or discourage foreign ownership of property here will be very difficult if not impossible to reconcile with the government's stated intention of encouraging and inviting direct foreign investment - not to mention its attempts to attract foreigners with the skills SA needs to boost growth.
"If there is anything investors dislike, it is a mixed message, so this is likely to bring about less investment, less economic growth and job creation - and ultimately less home ownership among lower income South Africans - than the government had hoped for.
"And what is going to be the message to skilled foreigners who decide to invest their time here? You can come here and work here but don't ever think about buying a house here and making SA your home?"
Everitt also says the issue of foreign land ownership has little if anything
to do with land reform and that it is disingenuous to link the two issues. "It
is an absolute misconception that huge demand from foreign buyers using pounds
or dollars is driving up prices beyond the reach of local buyers and
thus limiting the availability or affordability of land for land reform.
"Foreign buyers are generally shrewd purchasers who do their research
and are highly unlikely to pay above the market value for any SA property. They
are thus by no means the 'culprits' behind the high prices in the luxury out-of-town
estates that seem to be the main bone of contention. Neither are
the developers, who are only operating according to free market principles.
"In fact, we would venture to say that cutting foreign buyers out of the picture will do nothing at all to enable more South Africans to become homeowners, but will definitely disempower existing property owners and sellers and could do serious damage to a sector that has been a mainstay of SA's economic growth for several years - and which Finance Minister Trevor Manuel was at pains to boost even further during the recent Budget."
However, says Everitt, continued uncertainty about government's policy on foreign property ownership is likely to be even more damaging, so indications that a decision one way or the other will be made soon are welcome.
Issued by Chas Everitt International
For further information call Brenda Smith at
Chas Everitt International Bryanston on 011 463 2033
or visit www.chaseveritt.com