Already there are signs of renewed interest in the property market and we have seen an increase in the number of clients approaching us about potential projects. We are also hopeful that the 2010 World Cup will provide South Africa and Cape Town in particular with significant international exposure and that this will ultimately lead to an increase in overseas investors investing in the local property market.

Although most of the City of Cape Town’s staff restructuring processes have been completed and the Planning District offices are now up and running, problems do remain in terms of the capacity of some of the District offices to process planning applications timeously. We understand that improving capacity and application processing timeframes is an ongoing challenge for the City and we urge the City to either ensure that each District Office is adequately staffed or alternatively consider appointing planning consultants to assist the District offices that are struggling. Both Isalde and myself provided the City with this form of assistance during 2008 (along with other consultants) and were able to assist the City in reducing its backlog in delegated and Committee reports.

We also hope that the proposed Cape Town Integrated Zoning Scheme will be finalised and approved by Province as soon as possible as we believe that it will not only be easier to work with a single scheme throughout the City (as opposed to the current 20+ schemes that planners presently have to deal with), but that the new scheme itself has been well drafted and will hopefully minimise the number of planning applications that are required in order to achieve desirable development outcomes.

2010 will also hopefully be the year in which the Section 14 lapsing of rights issue is finally resolved by Province. We urge the key decision makers to give this matter priority attention as the rights are due to lapse in mid 2011 – ie just over a year away. We therefore hope that statements on how this matter is proposed to be handled will be issued very soon.

We wish the City everything of the best with its roll out of a new metropolitan spatial development plan and associated district plans. The first draft plans and documents were released for public comment during the latter part of 2009. Our firm has been involved in assisting the South African Association of Consulting Professional Planners in providing comment on these documents. The second draft of the plans and documents which will no doubt have been amended in the light of the public consultation process, are eagerly awaited.

Finally we hope that 2010 is the year that the first phase of the City’s Bus Rapid Transit System (BRT) is completed and made operational. We have no doubt that the BRT system as it is rolled out will make a huge difference to the City’s current leaving much to be desired public transport system. We look forward to seeing land use activities responding to the BRT corridors and stations in a positive manner so that the overall efficiency and sustainability of the City will be improved – to the benefit of all its residents and visitors.

We wish all our clients, colleagues and friends a fantastic 2010!

In this regard it is understood that engagements with key officials are expected shortly. I will keep my blog updated as events unfold.

While the Amendment Act reinstated all property rights affected by Section 14, the Act states that these rights will lapse in June 2011. From what I can gather, this is an absolute date unless this legislation is again amended. As we are discovering with the 2010 World Cup, dates in the next decade have an ability to catch up with us quicker than we expect and 2011 is really just around the corner.

Earlier in the year the ACTRP drafted a letter which aimed to set out the potential administrative challenges surrounding the lapsing of the zoning rights of potentially thousands of properties in the Province as a result of Section 14. To put it mildly, these challenges are massive. Without meaning to sound too dramatic, I am concerned about the impact of the 2011 lapsing and that the planning industry and broader property industry as a whole is underestimating not only the impact of the lapsing on the Western Cape property industry (in terms of the long term certainty for property rights, and in terms of the impact on property value and investment decisions), but also the magnitude of the administrative actions that will be required in order to ensure that the Section 14 lapsing occurs as smoothly and as painlessly as possible.

Taking the above into account, in my view the following key issues need to be addressed urgently: 

1. The ability of the new Cape Town Integrated Zoning Scheme to fix Section 14 for the CMA needs to be confirmed, and if this is the case the approval of the IZS needs to be fast tracked to so that approval can be issued before the 2011 Section 14 lapsing deadline.
2. Where a land use or building had been effected on a site in accordance with its zoning, but only partially uses the rights within that zoning (eg only 50% of bulk used), that zoning and all the rights associated with it should be confirmed in its entirety, as if is this is not possible the Section 14 lapsing will potentially result in millions of rands of lost development potential. It essential that that this line of thinking is pursued and tested for legal correctness.
3. If it is agreed that Section 14 will take effect in 2011, Council and Province need to proceed now with the necessary procedural arrangements, including preparing for the notification of property owners of the impending lapsing, developing a rigorous and transparent system of determining existing use rights at the time of lapsing as well as an appropriate deemed zoning for each affected property, and establishment of an appeal committee with clearly set out terms of reference. Local authorities in particular will either need to ensure adequate staff resources to deal with the extra work load, or make budgetary allowances for the appointment of private sector forms/individuals to assist in this regard.

Comments on this posting would be most welcomed.

“I have confirmed, with some astonishment, that the “grandfather clause” of LUPO has come into effect – indeed in June last year !! I am not sure if any of you were already aware of this, but it appears to be not ‘common knowledge’.

The fact ‘slipped out’ yesterday in a discussion with an ex-provincial employee now working with one of the Local Authorities. I immediately called both the PGWC and a senior official at City of Cape Town. The officials I contacted were highly reticent to confirm the fact and somewhat anxious that “this was now in the public realm”, as ‘the ducks were not yet in a row’ (no Provincial Circulars have been sent out for example). 

This is obviously rather profound, perhaps ‘explosive’, for the entire planning, property and legal profession.  You may want to formally corroborate my information and perhaps begin the process of understanding the future implications of this news through workshops between practitioners and public sector.

I find it pretty inconceivable that this has not been on top of the agenda of Province to deal with the ramifications, which many of us may applaud as being ‘about time’, but clearly a proper communication and information strategy is required so there is no ‘panic’ !!

To remind you all of Section 14 of LUPO, otherwise known as the ‘grandfather clause’.

14(2)(a)    If after the expiry of a period of 15 years after the date of commencement of this Ordinance (1985) any use right in respect to which the applicable provisions of section 7 apply (ie Zoning Schemes) has not been exercised, the land concerned shall, subject to provisions of paragraph (b), be deemed to be zoned in accordance with the utilisation thereof, as determined by the council concerned, and any applicable zoning map existing at the said expiry shall lapse.

I have not copied the rest of the section, but there are clauses dealing with appeal committees, suffering of loss, zoning deemed to be the most restrictive, substitution zoning schemes ‘where land is not necessarily zoned in accordance with the utilisation thereof’, council to amend zoning maps, etc.”

Following receipt of this email I attended a Property Development Forum meeting at the City on Monday 24 November. Senior officials of Province were present at the meeting and they were asked to clarify the status of the “grandfather clause”. The officials advised the forum that Province was in the process of drafting a circular explaining the implications of the lapsing of the clause . The officials did not deny that the clause has lapsed.

The apparent lapsing of the clause has taken the entire planning industry by surprise. As the 15 year period drew to a close in 2000, Province commenced a process of extending the 15 year period on a short term basis. It was therefore assumed that the planning industry and the general public would be given prior warning before the lapsing was due to take place, but clearly this did not occur.

The purpose of this blog is not to focus on why it was allowed to lapse and why no one was notified as I believe that that discussion is for a different forum. However it is hoped that this blog can help to start the interactive process of trying to understand the implications of the lapsing of the “grandfather clause”. Here is what I have managed to discover so far this week after discussions with several colleagues in the property industry who I consider very knowledgeable of the clause and its potential implications:

There is general consensus that the lapsing only affects properties created and afforded zones in terms of zoning schemes that were adopted prior to 1985. Properties created in terms of post 1985 zoning schemes or that have been rezoned or created through a rezoning process do not appear to be affected. The properties mainly affected are therefore properties created and zoned in terms of a pre 1985 created zoning scheme and which are not being utilized in accordance with that zone. A example is that of a property in the old Table View township that was historically zoned for general residential development (flats etc) but that was only developed with a single dwelling. It would appear that such a property has lost its general residential zoning with the lapsing of the “grandfather clause” and would now have to be allocated the most restrictive zone existing in the applicable zoning scheme that caters for a single dwelling, namely the single residential zone.

The above example illustrates the potentially serious implications of the lapsing. As a legal expert put it, literally millions of rands worth of property value have effectively been wiped off the map of properties throughout the Western Cape. In terms of the impact of the lapsing on appropriate urban and regional planning, as Mr Chittenden indicated, in some cases (ie where historic zonings allowed for developments rights way in excess of what would today be considered sensitive development) the lapsing can be viewed as positive. But in other cases such as in the Table View example, where the exercising of the historic rights is considered desirable from an urban planning perspective, the lapsing creates unnecessary procedural complications as property owners now have to apply to rezone their properties in order to regain the development rights that they have just lost.

It is hoped that the Provincial circular clarifying the implications of the lapsing and hopefully setting out any grounds for appeal, will be issued as a matter of urgency as this would in my view form the basis for assessing the implications of the lapsing and as a departure point for any alternative views or legal challenges. In this regard a legal expert that I spoke to noted that this clause of LUPO which was drafted in the pre-1994 era may be regarded as unconstitutional in view of its impact on property rights. A High Court challenge may lead to a positive ruling in this regard. It is also hoped the City will shortly issue a press statement with regard to the lapsing and it is understood that senior City officials have received legal advice to the effect that the clause has indeed lapsed and that operational procedures to deal with this need to be put in place with immediate effect.

There is always a danger of sensationalising this kind of information or of preempting official statements by the City and Province that would hopefully bring further clarity as to the implications. However I believe that there is now sufficient information in the public domain to confidently state that the clause does indeed appear to have lapsed and that the rights of certain properties do appear to have been effected. I therefore felt the need to make a public statement on my website and to warn my clients and the general public not to make any property purchase or investment/development decisions in the Western Cape until competent professionals have assessed whether the lapsing of the “grandfather clause” has potentially affected the development rights on those properties.

It has been my experience that there are many aspects of town planning that many estate agents are not aware of. This can lead to the agent either not pointing out relevant town planning restrictions to the seller or even giving incorrect town planning advice. I would therefore like to urge estate agent franchises to equip their agents with a basic knowledge of town planning issues – in other words sufficient knowledge to able to know when to call in a professional town planner to either provide advice or resolve a planning issue. Secondly I would like to urge potential buyers to investigate the town planning rights and restrictions that apply to the properties they are interested in purchasing before making a purchase decision. This investigation can either be undertaken by a professional town planning consultant or by approaching the Council’s local district planning office directly. If approaching the Council directly it is important to make sure that the person one speaks to is a professional town planner with a good knowledge of the area in which the property is located.