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'Former landowner still liable for debt on land that Govt takes without paying'

13 February 2020 10:41 AM
Tags:
Banking
Land reform
Banking Association of South Africa
Refilwe Moloto
BASA
expropriation without compensation
EWC
financial system
Pierre Venter
If EWC isn’t executed wisely it may have the unintended consequence of breaking the financial system, warns Busa.

(Also read: CAS COOVADIA - Here’s what’s at stake if land grabs are sanctioned)

The government intends to expropriate land without paying compensation.

What would happen to a landowner’s mortgage if she is compelled to hand over her land?

She would still have to pay the full debt, according to the Banking Association of South Africa (Basa) after it sought initial legal opinion.

Loans are secured by a mortgage over a property.

They remain valid and binding irrespective of the value realised for the property used as security.

Apples account for 5.45% of the value of all exports from the Western Cape. (pixabay.com, 2019)

A summary of Basa’s submission to Parliament:

  • The economy can’t grow without a solid financial system. Banks rely on the market value of property as security for loans and to ensure consumer deposits can be repaid on demand.

  • Expropriation without compensation (EWC) should not be left to the executive without judiciary oversight.

  • The prospect of EWC is starting to dampen investment by farmers into their properties.

  • EWC will reduce the value of assets on banks’ balance sheets and, therefore, their ability to give loans. Banks will be forced into far more conservative loan practices to not fall foul of the SA Banks Act and the global Basel regulatory framework for the financial sector.

Refilwe Moloto asked Pierre Venter (General Manager of the Banking Association of South Africa) to explain Basa’s concerns around how EWC will impact on the mortgage of a landowner facing expropriation.

You are still responsible for the payment of the debt [when your property is expropriated] …

Pierre Venter, General Manager - Banking Association of South Africa

The process is still under review… we’ve done a formal, written submission… suggesting its absolutely essential that the state guarantees the difference in the outstanding balance in terms of their undertaking in 2012…

Pierre Venter, General Manager - Banking Association of South Africa

It’s all about execution. If it’s not carried out properly it could be absolutely disastrous for everyone in our country! Rich and poor, black and white, our entire economy, the banking system… We’re calling for independent, credible research into the socio-economic impact… to make sure it won’t bring our country to its knees.

Pierre Venter, General Manager - Banking Association of South Africa

Our President promised us it wouldn’t harm our economy or aggravate food insecurity in South Africa… We look to him to ensure it happens in an orderly way which doesn’t bring our economy down…

Pierre Venter, General Manager - Banking Association of South Africa

… if the problem is severe enough banks may withdraw from lending to this sector.

Pierre Venter, General Manager - Banking Association of South Africa

Listen to the detailed discussion in the audio below.

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13 February 2020 10:41 AM
Tags:
Banking
Land reform
Banking Association of South Africa
Refilwe Moloto
BASA
expropriation without compensation
EWC
financial system
Pierre Venter

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