11/05/2018 12:07 SAST | Updated 11/05/2018 12:07 SAST

Why Malema's Comments On Land Expropriation Are Nonsense

He said that bonded houses will be detached from the land they stand on through expropriation without compensation.

Economic Freedom Fighters, Julius Malema.
RAJESH JANTILAL via Getty Images
Economic Freedom Fighters, Julius Malema.

Julius Malema, in detailing his plans to roll out land expropriation without compensation, argued for the detaching of bonded houses from the land they stand on.

When and if the Constitution is amended and land expropriation is implemented, Malema said, homeowners who are still paying home loans must qualify for "discounts" from banks, because the land the structure stands on will be "nationalised" and therefore "cannot be charged for".

His comments were ridiculed as nonsensical. Analysts laughed off the suggestion, saying it is highly impractical.

According to TimesLive, Malema made the statements at a media breakfast hosted by the EFF on Thursday.

Footage on eTV's 8pm news on Thursday showed Malema saying: "We are nationalising the land and everything that comes with the land underground‚ not these things on top. If you've got a bond‚ we will talk to the bank that we have taken the land. [We will ask the bank] how much was the land, and they will tell us, and we will say, 'That is gone without compensation.' You will be left with [only] the bond of the house."

"We've never said we are nationalising the houses. We are nationalising the land. If you have a bonded house‚ you must continue to pay, but we will give you a discount because we have taken that debt away from you. We are not going to pay any bank‚" he added.

Agricultural economist Hamlet Hlomendlini said Malema's suggestion is "senseless".

"You can't separate structures on the land from the land itself. [Malema's] comments are senseless. The banking sector will fight this idea tooth and nail if it is implemented, even if it means them crashing the economy, they will over this. You cannot separate property from the land," he said.

"The house itself is part of the land it stands on, and makes up the property as a whole. When banks finance farming activities, for example, they attach properties into the transaction. The banks will have to restructure everything. And on farms, most of the money is attached to the land rather than the property."

"Residential homes are not situated on acres of land. When banks finance your home, they look at the property as a whole. How do you differentiate how much the house is valued at without the land and how much the land is valued at without the house?"

Economics expert Mike Schussler said the main stakeholders of banks are the people who use them, so targeting banks target South Africans directly.

"You are taking value away from the black South Africans you intend to help. The money in the banks will come under immense pressure if this idea is implemented. Banks will not be able to repay — they in turn will then find it difficult to finance anything further. How do you determine the value of the land a house stands on?" he asked.

"What makes one property in an area different from another? It is what is on the property. The house. The majority of losses if this idea is carried out will be carried by black South Africans. This is the economics of dispossessing black South Africans. It's a crazy idea."

North-West University professor Elmien du Plessis said South African law states that anything attached to the land forms part of the property.

"In South African law, it stipulates that anything attached to the land forms part of the land. It is not possible as the law stands to separate the land from the buildings or houses on it. If the state takes ownership of the land and withdraws my permission to have access to that piece of land, I can't move my house elsewhere," she said.

"Conceptually, it is not possible. If the land is nationalised, and the state becomes the owner of the land, it will become the owner of the buildings on the land. This is how the law stands. They will then have to change property laws as well."