Uncomplacent Corrigan: EWC could cost you your house – but not its mortgage bond

South Africa's Institute of Race Relations, the country's oldest think tank, will celebrate a century of existence in 2029. Based on classically liberal lines, speaking truth to power and challenging perceived wisdom comes with the territory – as does weathering populist storms initiated by political actors. But criticism has never deterred the IRR, so there should be little surprise to witness its spirited resistance to the ruling ANC government which despite the huge risks and ruinous Zimbabwean experience, remains determined to impose Expropriation of land Without Compensation. While politicians are soft-soaping the potential impact of EWC ambitions, the IRR warns that at its core this is an attack on property rights, which are the foundation of any successful democracy. In this podcast the IRR's Terence Corrigan warns against complacency, claiming that while farmers might be most at risk, confiscation of residential property cannot be discounted. – Alec Hogg.Terence Corrigan from the Institute for Race Relations joins us now. Terence your piece this morning on Expropriation Of Land Without Compensation (EWC) affecting or potentially affecting residential properties has got the business community all in a tizz. It's very well researched. You provide lots of evidence to it. It's a topic that you and I spoke about in London going back a couple of years ago. Before we talk about residential or the potential impact on people's home, what got you interested in the subject in the first place?.___STEADY_PAYWALL___.I was interested in that property rights are a part of the human rights framework which is often underplayed. One can have all sorts of wonderful rights but if your estate can be pulled out from under you, you can be in a pickle that's very difficult to resolve. Having done quite a bit of work around Africa it has struck me that we have a population that is very entrepreneurial, wants to make money and provide for itself, but one of the big barriers that stands in the way is a lack of control over it's assets and the ability to leverage them..This is born out of the legacy of colonialism. Countries such as Zambia, Nigeria and South Africa still carry the legacy that Africans exists in a sort of world apart and need special restrictive regimes that grant the leaders control over the assets, which we need to break from..What is the public perception right now. You obviously engage a lot. You do talks and presentations. What does the public think is going to happen with the EWC?.I think expropriation of land is some sort of an assumption that's been touched. We're talking about something far bigger and whose implications could be far wider. I've been talking to some fairly well-informed business people and ordinary townies around the braai. Many see this as something only the farmers need to be concerned about. What prompted me to write that piece that you referred to was that I was seeing lawyers and mortgage agents talking about this as though this is really an agrarian thing. If one has an understanding of the Land Reform programme, one would not make that assumption. I am in favour of land reform as it is both morally necessary and economically it can be very useful to us. My concern however, which could be a highway to disaster, is the current policy trajectory which undermines property rights and which ignores the real problems in favour of this idea that if only the government has power to take your stuff you know somehow things will fall into line. It's insane..The latest furore here came from a tweet that SA Home Loans put out. Take us through all of that..Yes, as far as they're concerned if your home gets expropriated and you still owe money on a bond they will expect the bond to be paid but they don't think it will come to that because they think this is all going to be about unused land and about farms and things like that. It's great they are willing to engage with their clients but they have fundamentally misread the situation. I've heard the same thing from other banks. Currently, until something changes, people must accept that they have entered into those contracts and banks don't expect to be held liable. That is not a great position to be in if you are a farmer or a suburban homeowner or anyone who has managed to acquire a small property that has a bond. There are two things to bear in mind. The first is that we saw a lot of this back in 2018. Farmers in particular saying this will never happen because the banks won't let it happen. The idea is that the banks will come to the rescue – we're not seeing that. Banks seem to be interested in protecting their own interests, which I can understand. Those of us who are who are concerned are going to have to accept that pushing back is the responsibility that falls on each one of us..If the banks are then saying that they will be able to presumably recover the mortgages from people who might lose their properties. Does this mean that they will continuing to lend, if you buy a farm will you still get a mortgage?.I think there's a lot of hypotheticals involved here now. No one knows how this is going to play out. What we are saying is don't be sanguine as the direction this is going is not encouraging. There have been comments from the banking industry over the years that this could trigger what they call a classic banking crisis. There have been comments that if this goes ahead, banks would would no longer extend credit which I think the private sector's terms are about R120bn to the agricultural sector. There's a very real chance of this. Around 2011 an approach was made to the State by organised banking. The idea was that if the Government starts to seize properties then the banks want their interest to be taken care of, the government to guarantee the bonds. But it's also interesting that over the last year the question was asked in Parliament if the government was talking to the banks about this and the answer was quite simple – No! How does this play out? You would have banks taking large knocks. For example if my house had been expropriated when I was only halfway through the bond I doubt very much the bank would be able to get enough money from me trying to sell my car or furniture, and the government is not in the mood to dish out large sums of money. As far as extending credit, they would be extremely conservative in future..What about the legal challenges. Surely if somebody came along and wanted to expropriate my home I would defend my rights, at least on my own if I have to but certainly through the legal process. Isn't that something that's going to happen?.This is the big question mark. This is why we have advised against complacency. The ANC has said over the last couple of weeks that they intend that the constitutional amendment should explicitly vest the compensation aspect in the hands of the executive. Now a court has to enforce the law in front of it, and while the constitutional amendment is not the sum total of the process, the issue this creates is that it rigs the rules of the game very much in favour of State. If the courts are not able to instruct the State as to what would constitute an equitable price but can only disagree. You face the following situation: A property owner, particularly the likes of you and I, we can't stand up to the resources of the State indefinitely. If the likely outcome is the courts that will only be able to tell the relevant institution to try get more money, there is very little anyone can do, which is why we are saying don't fall for the argument that somehow it's going to be sorted out down the line. The Constitutional Amendments are not the main thing, it's the Expropriation Bill, all of these things are important. And to set up a situation where property rights have been shrunk and cauterised and placed in the hands of politicians and removed from the jurisdiction of the courts that is a situation that I do not think this country will want find itself in.

Uncomplacent Corrigan: EWC could cost you your house – but not its mortgage bond

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