Nil Compensation for Expropriation – What the Law Says

The Expropriation Act, 2024 (Act) was published in the Government Gazette on 24 January 2025 and repealed the Expropriation Act, 1975 (Act No 63 of 1975).  The Expropriation Act provides for the expropriation of property for a public purpose or in the public interest; to regulate the procedure for the expropriation of property for a public purpose or in the public interest, including payment of compensation; to identify certain instances where the provision of nil compensation may be just and equitable for expropriation in the public interest.  

Section 25 of the Constitution of the Republic of South Africa, 1996 provides a right to property and stipulates that “no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.  Section 25 of the Constitution provides further that a property may be expropriated for a public purpose or in the public interest and subject to compensation.

In terms of the Expropriation Act “public interest” include the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources in order to redress the results of past racial discriminatory laws or practices; and “public purpose” to include any purposes connected to the administration of any law by an organ of state, in terms of which the property concerned will be used by or for the benefit of the public.  

Section 12 of the Expropriation Act, arguably the most controversial section of the Act stipulates at section 12(3) that “It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest…”

The Act confirms the following four circumstances in which property may be expropriated with nil compensation:

1. where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value;

2. where an organ of state holds land that it is not using for its core functions and it is not reasonably likely to require the land for its future activities in that regard, and the organ of state acquired the land for no consideration;

3. notwithstanding registration of ownership in terms of the Deeds Registries Act, 1937, where an owner has abandoned the land by failing to exercise control over it despite being reasonably capable of doing so; and

4. where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land.  

The question arises as to how one should know if a property has been expropriated or if the process is ongoing?  The Act clearly stipulates in Section 24(1) that the Director-General must ensure that a register of all expropriations that are intended, effected and withdrawn, and of decisions not to proceed with a contemplated expropriation by all expropriating authorities, is opened, maintained and accessible to the public.  

Written by: Jean-Mari De Beer -Le Grange
Moderated and approved by: Glenda Nell

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