Explainer: When can nil compensation can be awarded for expropriation?

The government can expropriate and pay nil compensation for land or buildings in situations ranging from abandonment or disuse.

This comes after President Cyril Ramaphosa signed the Expropriation Bill into law on Thursday, which is now an act of parliament.

Section 12 (3) of the act provides for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances.

Read: Expropriation: Don’t be alarmed – court may award nil compensation, but is not required to

The first circumstance in which nil compensation can be paid is when the land is not being used, and the owner’s main purpose is not to develop the land or use it to generate income but to benefit from the appreciation of its market value.

In some cases, landowners can hold onto vacant land, expecting it to appreciate without having to develop it or even pay taxes on it. However, in the event of a public project like a freeway or road expansion, the compensation could be limited based on the land’s current utility and not future market expectations.

Another circumstance in which the state can pay nil compensation is when an owner has abandoned the land by failing to exercise control over it, even though it is registered under their name as per the Deeds Registries Act. If that owner has abandoned the land, the law may not consider them the active owner anymore.

Read: Ramaphosa signs off on Expropriation Act

The same applies when the property’s nature or condition poses a health, safety, or physical risk to persons or other property.

Additionally, where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land, the government may pay nil compensation.

This means that if the current market value of the land is the same as or less than the amount of money the government has already spent on buying and improving it, then the government might not need to pay the landowner any extra money.

Read: Zimbabwe fails to pay white farmers who had land expropriated

The act’s application is not limited to citizens but also applies to the state. Where an organ of state holds land that it is not using for its core functions and is not reasonably likely to require the land for its future activities in that regard, and the organ of state acquired the land for no consideration, then nil compensation also applies.

Section 12 (4) emphasises that when a court or arbitrator determines the amount of compensation, it may be just and equitable for nil compensation to be paid, having regard to all relevant circumstances.

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