South African bank says customers must honour home loan payments even if land is seized

An email from South Africa's Nedbank regarding land expropriation. Photo / Supplied

A South African bank has sparked a firestorm of criticism after informing customers they would still have to pay off their mortgage even if their property is seized by the government.

In an email circulating on social media, an official from Nedbank — one of the country's big five banks — informed the customer that "bond payments remain due" regardless of any expropriation, "with or without compensation".

"Dear customer, thank you for the query you have raised with regard to the impact of land expropriation to your bonded property," the email from Nedbank's client services resolution manager said.

"Nedbank is not privy to what provisions may be made for land purchasers whose land is encumbered, and what the proposed Review Committee would come up with to address this. However, we believe a balance needs to be achieved between the parliamentary agenda, and in particular the law of contract.

"It is important to note the Home Loan agreement is subject to a contractual agreement, and bond payments remain due and payable until such time that the bond is paid in full irrespective of any form of land appropriation — with or without compensation.

"We would encourage you to continue with the bond payments until such time a determination is made the time of which is also unknown to us. We trust that our response meets with your expectation."

The email sparked outrage.

"I'd love to see you get your money out of a person whose property had been taken without compensation," Henri Du Plessis wrote on the bank's Facebook page.

"What the hell is this, Nedbank?" wrote Jurie Absmeier. "This is your response? You won't get any payment from me."

William Guillum-Scott asked how the government would obtain the title deed to the property if it's held by the bank while the property is being paid off.

"If the bank hands over the title deed to the government, they are in breach of contract with you," he said.

"Surely then you have rights to sue them? Their agreement with you is now null and void. No court in the world can find you guilty of breach of contract if you no longer are in legal possession of the property mentioned in the contract.

"If Nedbank isn't as scared as any present property owner yet, they should be."

In a lengthy copy-and-pasted statement in response to customers posting the email, Nedbank said the "land debate itself has already had a negative impact on overall investor sentiment and, therefore, economic activity and job creation".

"But, so far, it has not yet directly affected Nedbank or the way we assess credit for our clients," it said.

"We fully support the democratic process and land reform debate and the need for historical redress, but it is vital that this sensitive and important issue is handled properly to ensure no lasting impact on economic growth and food security."

Nedbank said it did not support the government's proposed change to Section 25 of the country's constitution "as this already provides for expropriation without compensation in cases where a court holds this to be just and equitable or it is in the national interest".

"The actual wording of any proposed changes will be absolutely vital and would need to be assessed before any economic and credit assessment impacts can be determined," it said. "We feel it would be wise to wait for this process, rather than pre-empt this without the detail."

Bianca Herrmann said she did "not need your long 'copy and paste' message".

"I simply need a yes or no," she wrote. "When EWC happens will people be still liable for the bond? Yes or no? As simple as that!"

A Nedbank spokesman said clients were urged to "be patient as this process unfolds". "Until there's further clarity on this process, it is business as usual at Nedbank," he said.

It comes as tensions reach fever pitch after Donald Trump's controversial comments last week on the racially charged issue of land redistribution sparked an international incident and accusations the US President was peddling a "white supremacist" conspiracy theory.

South Africa's ruling African National Congress on Tuesday announced it was withdrawing a land expropriation bill that has been stuck in parliament since 2016.

The government is still pushing ahead with plans to amend the country's constitution to allow for the expropriation of land without compensation.

The ANC said in a statement it was withdrawing the expropriation bill "for further consideration upon the conclusion of the Constitutional Review Committee process".

"As the ANC, we reiterate our commitment to pursue the expropriation of land without compensation as one of the measures to ensure that land reform is implemented in a way that increases agricultural production, improves food security and ensures that the land is returned to those from whom it was taken under colonialism and apartheid," the statement said.

Public Works deputy minister Jeremy Cronin said the move was intended to send a signal to calm both sides of the debate following Trump's comments.

Cronin said a redrafted bill would take into account a clause in the Bill of Rights that puts limits on action to address "past racial discrimination" to that which is "reasonable and justifiable in an open and democratic society based on human dignity‚ equality and freedom".

"Now we will need to add‚ mainly to send a signal to the courts‚ to Trump‚ to Fox News but also to the hotheads on the other side of things that yes … once Parliament has decided … that in certain cases expropriation without compensation will be allowed," he was quoted by the Sunday Times as telling fellow MPs.

Last Thursday, Trump tweeted that he had asked US Secretary of State Mike Pompeo to "closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers", saying the government was "now seizing land from white farmers".

In response, South Africa's official government Twitter account said the country "totally rejects this narrow perception which only seeks to divide our nation and reminds us of our colonial past".

"South Africa will speed up the pace of land reform in a careful and inclusive manner that does not divide our nation," it added.

Trump was responding to a segment by Fox News host Tucker Carlson on apparent moves by the South African government to begin the process of unilaterally seizing two farms after negotiations with the owners to purchase the properties stalled.

The owners of Akkerland Boerdery wanted 200 million rand ($22.7 million) for the land but were offered just 20 million rand. If the seizures go ahead, it would be the first time the state refuses to pay market value for land.

"I only want a fair and market-related price for my land," co-owner Johan Steenkamp told the Afrikaans-language Letaba Herald this week. "We do not want to fight with anyone, we just want to be treated with respect and legally compensated."

Since the end of apartheid in 1994, the ANC has followed a "willing seller, willing buyer" process to redistribute white-owned farms to blacks.

That process has been slow — a 2017 government audit found white people still owned 72 per cent of private farmland in South Africa, despite making up less than 9 per cent of the population.

Following Trump's tweet, State Department spokeswoman Heather Nauert said land expropriation without compensation "would risk sending South Africa down the wrong path", but toned down the suggestion of land seizures and large-scale killing of farmers.

Civil rights group Afriforum, which represents the white Afrikaner minority, alleges that white farmers are being targeted in a brutal campaign of politically motivated farm attacks.

The exact numbers of people killed in such attacks is disputed. The AgriSA union representing commercial farmers says the number was 47 last year, Afriforum says the real number is 84.

While Afriforum alleges white farmers are killed at a disproportionate rate, critics say the farm murders are just part of a broader crime wave — nearly 20,000 South Africans, black and white, were murdered in 2017.

In a direct rebuke to Trump, the US Embassy in South Africa this week issued a cable titled "Despite Crime Epidemic, Farm Murders Down", citing AgriSA's figures to claim farm murders were at their lowest level in 19 years.

"Some journalists and lobby groups have simplified complex land disputes to serve their own ends," said the cable, obtained by Foreign Policy magazine. "(There is) no evidence that murders on farms specifically target white people or are politically motivated."

It came as UK Prime Minister Theresa May said she supported South African President Cyril Ramaphosa's approach to land reform as long as it is "legal".

"The UK has for some time now supported land reform that is legal and transparent and generated through a democratic process," May told reporters in Cape Town on Tuesday.

"I discussed it with President Ramaphosa during his visit to Britain earlier this year and will discuss it with him again later today.

"I welcome the comments that President Ramaphosa has already made, bearing in mind the economic and social aspects of it. I think he's made some comments that it won't be a smash and grab approach. I think there's an opportunity to unlock investment."

Sign up to the NZ Herald Business page on Facebook for latest news, commentary, data and analysis