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Assessing and promoting civil and minority rights in South Africa.

[Source: Business Day By Cas Coovadia.]

The property market and economic growth generally will be severely affected by the expropriation of land, whether without compensation, below market value, or outside the law, the constitution and the courts.

Property owners with mortgages and other bonds on property that may be expropriated without compensation face especially severe liabilities. Initial legal opinion indicates that borrowers would still be liable for the full debt on a property, even if the underlying asset has been expropriated without compensation. This is because clients enter into loan agreements with banks that are secured by mortgages over the property. These loan agreements remain valid and binding, irrespective of the value realised for the property used as security.

Banks have extended R1.6-trillion in residential, commercial and agricultural mortgages to borrowers. The market value of land-based property in SA is estimated at R7-trillion, representing the homes and savings of ordinary people. Banks are very mindful of the need to protect the interests of their customers, both depositors and borrowers, some of whom could be potential beneficiaries of the land reform process.

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South Africa at a Glance
58 780 000 (mid 2019 estimate)
4.0% y/y in December 2019 (CPI) & +3.4 y/y in December 2019 (PPI)
-0.6% q/q (3rd quarter of 2019)
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