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What's wrong with government's state land lease & disposal policy, and how can it be remedied?

PLAAS Position Paper for National Land Tenure Summit, 2014: State Land Lease and Disposal Policy

This policy signed by the Minister in July 2013 introduces profound changes in tenure rights in the land redistribution programme. Now, beneficiaries of land redistribution are not to acquire ownership of land, but are instead to lease land from the state. The state is the willing buyer, purchasing farms from willing sellers. In recent years it has provided farms on leasehold for 3 years at a time, but due to widespread non-payment of rent, and experience that farmers leasing land are unable to develop their enterprises in this time so as to pay rent, the DRDLR developed this new policy in 2013.

The main content of the policy is as follows:

  1. No ownership: All land aqcuired for redistribution will be owned by the state.
  2. Long-term leases: Such properties will be made available on 30 years leases, renewable for a further 20 years if there is evidence of ‘production discipine’, a new and undefined criterion in land reform.
  3. Rent: Rent is to be determined on the basis of net turnover (ie. profit). The policy requires that beneficiaries pay 5% of their net turnover to the state each year. Such rental arrangements are available only to medium-scale and large-scale commercial farmers.
  4. Conditional tenure and evictions: The way rent is to be determined creates an incentive for lessees to keep profits low and to re-invest in production – but not too low or they may put their leases at risk. This is because beneficiaries who are not deemed (through a process apparently still to be established) to be adhering to ‘production discipline’ and not successful in farming will have their leases cancelled. To date, some beneficiaries have been evicted from farms acquired for redistribution on this basis, but the DRDLR has not made public how many ‘beneficiaries’ have been evicted, why, and through what legal procedure.
  5. Option to purchase: After 50 years of paying rent to the state, beneficiaries will be able to apply for (but not have an automatic right to) an option to purchase their farms from the state. Again, only medium to large-scale commercial farmers are to be allowed to apply for this option and only after 50 years.
  6. Poor to be perpetual tenants: Farm workers, former farm workers and small-scale or semi-subsistence farmers will not have the option to acquire ownership – unlike medium- to large-scale commercial farmers. This re-establishes the apartheid idea that certain categories of progressive farmers should acquire title, having proved themselves, while the poor should remain tenants of the state. Farm occupiers including labour tenants may, though, qualify for long-term leases at a nominal rental of R1.00 per year (note: this effectively affects the implementation of Section 4 of the Extension of Security of Tenure Act which provides for upgrading and securing long-term tenure rights, including ownership; that option of ownership is now removed).
  7. Rates, improvements and inheritance: Beneficiaries will be required to pay rates after the first five years, on termination or expiry of leases any fixed improvements they have made on the land will become state property, for which they will not be compensated. On the death of the lessee (assuming this is an individual rather than a CPA, Trust, CC or cooperative), the lease will not be inherited by the family; rather state officials will be able to decide whether or not a spouse or other heirs will be able to get a lease to continue to live on and use the leased property.
  8. Absence of land rights: The extent of ‘absent leases’ is unknown but recognised by the Department as a challenge. Limited research in the Eastern Cape (Hall and Kepe 2014, forthcoming) shows that this policy is not yet being applied, and instead that beneficiaries are being left either with expired short leases; with caretakerships (in terms of which ‘beneficiaries’ can be given 30 days to vacate the property); or with no legal documentation but simply verbal agreements that they can occupy and use a farm. This leaves them in legal limbo and without any secure tenure rights. This is not tenure security. It is difficult even to understand this as land reform.
  9. State land administration: State land administration is the key to supporting this model of land reform. Does the state have the capacity to manage leases effectively? At present, provincial and district offices of DRDLR have taken on this role without suitable expertise and apparently also without additional posts, meaning that staff responsible for land acquisition now also are responsible to implement the Recapitalisation and Development Programme (to provide farming support), to subdivide farms (in terms of the Animal and Veld Management Programme) and to conclude and manage leases and rent payments.

This policy has already been signed by the Minister in July 2013, without prior public consultation.

 

ASSESSMENT

This is a policy that says that black people are not to be trusted with land.

While state leasehold can be a feasible tenure system, some of the reasons why the current policy is deeply problematic are that it:

  1. Creates a conditional system of tenure in which rights to land are allocated or removed by state officials
  2. Relies on state officials’ assessments of beneficiaries’ land use and production as a basis for their continued access to land
  3. Hinges on state land administration capacity that does not exist, which means that for now many (but an unknown number of) beneficiaries do not have secure tenure in the form of long-term (or any) leases.
  4. Rests on a fantasy of cost recovery, namely that the state will accrue income in the form of rent from beneficiaries, which ignores the experience of implementing state leasehold since 2006, which included non-payment of rent and the suggests that the state has little capacity to distinguish between people not paying rent.
  5. Creates inequalities in tenure rights between the poor and the better-off, with only the better-off having the opportunity to ever get ownership (and only after 50 years).
  6. Imposes obligations on beneficiaries without securing their rights to, for instance, to be paid compensation for fixed improvement at the end of a lease or
  7. Exposes land reform to patronage, as there is no system to ration the allocation of public resources or any limit the amount or value of land that can be allocated to any person.

 

THE ALTERNATIVE
  1. The question of what land rights people should get in the redistribution programme should be opened up to public consultation, especially with existing and prospective beneficiaries of land redistribution. Is state land ownership preferable to private ownership for beneficiaries of land redistribution, and under what circumstances can it work?
  2. If this is to be the model of the future, a massive investment must be made in developing dedicated and highly-skilled state land administration capacity within the DRDLR. This requires creating new senior posts in each provincial and district office.
  3. A register of which properties have been allocated, leased or transferred, to whom, and their tenure status should be made public and reported to Parliament on a regular basis. Without this, there is no transparency in the allocation of state properties bought with public money in the name of land redistribution.
  4. Establish written guidelines containing ‘transparent and fair criteria for the assessment of lease applicants’ and a ‘district database of potential lessees’ as proposed in the policy, on the basis of broad public consultation.