The dynamics of property ownership in South Africa’s (SA) townships, have evolved considerably over recent years. Investment in township properties is becoming increasingly profitable and rewarding, attracting more interest from various stakeholders. The legal framework governing township property ownership is a complex tapestry, influenced by historical legacies, socio-economic factors and evolving legislative reforms. This article aims to explore the current legal landscape surrounding residential property ownership in townships, highlighting key challenges and recent developments.
To understand the present, it is crucial to reflect on the past. Under apartheid, property ownership in townships was severely restricted, with discriminatory laws like the Group Areas Act 41 of 1950 preventing black South Africans from owning property in urban areas. Post-1994, the democratic government introduced reforms to redress these injustices, but the remnants of apartheid era policies impact property ownership patterns today.
The primary legislation governing property ownership in SA includes the Deeds Registries Act 47 of 1937 and the Sectional Titles Act 95 of 1986. For township properties, the Upgrading of Land Tenure Rights Act 112 of 1991 (the Act) is particularly relevant. The Act was passed to convert informal land rights into formal ownership thereby providing security of tenure for township residents. It provides for a ‘constitutionally permissible procedure for the determination of rights of ownership and occupation of land’, and as such, seeks to ‘secure and officially recognise land rights held by those living on customary and informal land, and to transfer power over those rights to the land rights holders’ (S Msomi and S Nene ‘Writing the wrongs of the past of the Upgrading of Land Tenure Act’ (www.wylie.co.za, accessed 29-6-2024)).
A significant portion of township residents live in informal settlements without formal land tenure. The process of formalising these settlements is often slow and bureaucratic, leading to uncertainty and insecurity for residents.
Despite efforts to issue title deeds to township residents through land reform procedures highlighted above, backlogs persist. Many properties still lack formal title deeds, complicating ownership claims and limiting residents, and the ability to leverage their property for economic purposes.
Township properties are often undervalued compared to those in suburban areas, affecting residents’ access to financing and fair market transactions. Financial institutions are sometimes reluctant to offer mortgage financing for township properties, further exacerbating economic disparities. However, financiers, such as uMaStandi among others have entered this arena to support entrepreneurs in townships by providing loans for property developments and rental businesses to assist business owners seeking to run profitable, sustainable, and legal township based residential rental businesses. This opportunity allows for township property owners to unlock dead equity in their properties and foster economic growth in the township property market.
Innovative community-based approaches are emerging to facilitate property ownership in townships. Programmes that involve community participation in the formalisation of land tenure and property registration are showing promising results.
Courts have played a pivotal role in interpreting and enforcing property rights in townships. The Upgrading of Land Tenure Rights Amendment Act 6 of 2021 (the Amendment Act) was motivated by the Constitutional Court decision in Rahube v Rahube and Others 2019 (2) SA 54 (CC), which exposed the Act, particularly the provisions of s 2(1) in its clear unfair discrimination against women, in that the Native Administration Act 38 of 1927 only allowed men to be household heads so when the Act was implemented, it only benefited men by allowing them to upgrade their tenure rights to ownership, leaving women vulnerable.
Inheritance brings an added layer of complexity to the township property ownership discussion. A judgment in Shomang v Motsose NO and Others 2022 (5) SA 602 (GP) heard out of the Gauteng Division of the High Court ‘provides ground-breaking insights for potential law reform with regard to property rights and transmission of property’ (Rosalie Kingwill ‘Ground-breaking judgment opens the door for law reform on apartheid-era family property rights’ (www.dailymaverick.co.za, accessed 29-6-2024)). The facts involve an applicant who is a ‘direct descendant … of the original permit holder’, and the property in dispute was ‘labelled a “family house”, according to the practices of the time, and [the applicant] expected to continue to be the holder of the family right when the tenure got “upgraded” over time’ (Kingwill (op cit)). In this matter ‘the tenure upgrades involved a transition from a right of occupation (a permit) to conversion to freehold’ (title deed) (Kingwill (op cit)). A family agreement that the applicant’s male relative (related by marriage) would be the custodian of the family house and registered as holder of the right in the deeds office later led the applicant to the dispute and revealed a ‘poor understanding of the implications of a purely administrative agreement that actually laid the ground for her potential dispossession over time’ (Kingwill (op cit)). Although the court highlighted that ‘family house agreements or practices have no force of law unless registered on the title deed as a caveat’, Du Plessis AJ, confirmed the ‘erroneousness of the adjudication that resulted in registration in the name’ of the male relative and ‘by inference his appointment as custodian’ of the family house and so ordered for the transfer of the property into the applicant’s name as custodian of the family house (Kingwill (op cit)).
The Shomang judgment is progressive in that it makes suggestions for the amendment of the Deeds Registries Act, in such a way that with some adjustments, could incorporate issues of inheritance through the Intestate Succession Act 81 of 1987 and the Administration of Estates Act 66 of 1965 ‘to be more inclusive of other forms of property holding, succession and transmission’ (Kingwill (op cit)).
Exploring township property ownership within the current legal landscape reveals a multifaceted interplay of historical legacies, legislative reforms and ongoing challenges. Despite significant strides in securing property ownership rights for township residents, substantial work remains. Addressing the persistent issues of informal settlements, title deed backlogs and property valuation disparities, requires a concerted effort from government, legal practitioners, and community stakeholders. By refining and implementing effective legal and policy framework, SA can move closer to realising equitable property ownership for all its citizens.
Thulisile Buthelezi LLB (UKZN) is a legal practitioner, notary public and conveyancer in Umhlanga Rocks.
This article was first published in De Rebus in 2024 (September) DR 12.
