South Africa's eviction bill risks driving up rents and deterring private investment, legal expert warns

“Millions of real estate investors, developers and home seekers are at risk,” says Jeandri Reid, litigation associate at Van Deventer Dowlath & Marx Incorporated. “While Parliament wants to improve access to accommodation, the draft in its current form introduces economic and legal unpredictability that could upend the property investment calculus.”

As the first major legislative overhaul of South Africa's eviction framework in more than 20 years, Reid says the well-intentioned Bill has arrived at a critical juncture for the property sector.

“The problem, however, is that it treats a criminal land invasion and an ordinary residential lease dispute as the same legal problem, despite these being two completely different legal and constitutional questions. Regulating both under the same framework doesn’t create equality before the law; it creates unpredictability for everyone,” she warns.

Capital flows to certainty, not risk

For buy-to-let investors and residential developers, capital flows toward certainty and away from unnecessary risk, she points out. “With this key investment principle in mind, consider that the mandatory joinder in the proposed amendments will make private landowners responsible for finding alternative housing without compensation or clear qualifying criteria. It’s a risk premium that many cannot afford to price into their long-term models.”

Reid outlines two very different scenarios under the proposed framework:

• A suburban landlord rents out a sectional title apartment to a tenant whose lease then either legally expires or is cancelled. When the tenant stops paying rent but refuses to vacate, the landlord is dragged into protracted litigation. Under the proposed Bill’s joinder rules, if local authorities don’t act, private owners could find themselves on the hook for housing responsibilities that actually belong to the state.
• A boutique developer planning a multi-unit block to inject much-needed rental stock into urban nodes factors in the new regulatory risks. Assessors, when evaluating the risks of uncompensated municipal burden-shifting and costly, open-ended litigation red-flag the development, leading them to either scale back or pull out entirely.

SA’s housing shortage numbers right now

At a time when South Africa can ill afford to disincentivise private construction, Reid cites Lightstone statistics which show that there is about only one available property for every 4.8 working households.

Further, municipal data from the City of Cape Town shows that it has more than 490,000 households on its housing assistance database, while the wider Western Cape provincial backlog is sitting at approximately 750,000 applicants.

The Amendment Bill’s explanatory memorandum contains provisions to relieve municipalities of financial burdens, which translates to reallocating the deficit to private citizens, she continues. “This won’t solve the crisis. Instead, it could create higher risk premiums on residential property, resulting in tighter housing supply, fewer new developments, and ultimately higher rental prices.”

For Reid, the appropriate solution is to divide the statute into two distinct legal frameworks: one that specifically deals with criminal, syndicate-driven land invasions, and a second one for evictions after the lawful termination of residential leases.

"The Bill introduces some heavy-handed criminal penalties, including fines up to R2 million and prison terms of up to two years for inciting or organising unlawful occupations While these measures are meant to deter syndicates, applying heavy-handed statutory mechanisms like these to everyday civil rental defaults is a fundamental mismatch," she says.

“Economic danger rarely lies in laws enacted with bad intentions, but in well-meaning policies that don’t factor in market-wide consequences,” she concludes. “Forcing the private sector to assume responsibility for the government’s housing deficits isn’t protecting the vulnerable – it’s pulling up the ladder on the rental stock that South Africans desperately need.”