Agricultural Land - The Struggle For Subdivision

Johan De Lange | SchoemanLaw Inc  

Category: Property Law 

The Subdivision of Agricultural Land Act regulates the subdivision of agricultural land in South Africa 70 of 1970 (hereafter "the Act"), which was repealed by the Subdivision of Agricultural Land Repeal Act 64 of 1998 (hereafter "the Repeal Act").

The commencement date of the Repeal Act is yet to be announced, and as such, the status quo continues.  

The purpose of the Act is to prevent the creation of smaller farming units that would ultimately be uneconomical and cause damage to the agricultural sector. In addition, the Act restricts agricultural landowners by restricting the subdivision of their land and even limits the length of time in which an owner may lease a portion of their property. 

What Are The Restrictions? 

Permission from the Minister of the Department of Agriculture is required for the subdivision of agricultural land. In Four Arrows Investment 68 (Pty) Ltd v Abigail Construction CC and Another 2016 (1) SA 257 (SCA), the Supreme Court of Appeal held that even in cases where a sale of a portion of agricultural land which is subject to a suspensive condition and an option for the sale of the portion would still require the consent of the minister. The court held further that without obtaining consent, the sale agreement would constitute a prohibited sale agreement in terms of the Act.  

Any attempt to subdivide the land without the minister's consent is prohibited. Even the lease of a portion of agricultural land for more than ten years similarly requires the written permission of the minister. The Act further stipulates that a renewal clause contained in a lease agreement that would result in a combined period of more than ten years requires the minister's consent. Considering the above, the Act creates an onerous and costly barrier to the unrestricted use and alienation of property. 

What Is Defined As Agricultural Land? 

The burdensome restrictions placed on agricultural land have led many to try and argue what constitutes and what does not constitute agricultural land. However, the Chief Registrar's Circular 6 of 2002 unequivocally classified all farm property as agricultural land, as defined in the Act. Therefore, all farmland and the subdivision of such land would require either the written consent of the minister or a letter from the Department of Agriculture that the land in question is not agricultural. The Act, therefore, remains a significant restriction on the development of any farmland in South Africa. 

When Will The Act Be Repealed? 

On 22 April 2021, the Minister of Agriculture introduced the Preservation and Development of Agricultural Land Bill (hereafter "the Bill") to the National Assembly. The Bill would amend the Repeal Act to make provision for the phasing out of the Subdivision of Agricultural Land Act. The new Act in its current form is more in line with the Spatial Planning and Land Use Management Act 16 of 2013. The legislative process can be lengthy at times. Still, with the current increase in the move toward more renewable energy sources and the use of farmland for wind and solar energy, we can expect the process to gain traction in the coming years. 

Conclusion 

Whether you are the owner, prospective purchaser or looking to lease agricultural land, the applicable legislative restriction can serve as a confusing and potentially costly barrier to your free use and alienation of property. Therefore, seeking guidance from a legal professional is essential to help you navigate the onerous requirements that may apply to you and your potential business endeavours about the property.

Johan De Lange | SchoemanLaw IncAttorneywww.schoemanlaw.co.za