The concept of private property and its intrinsic value will be turned on its head if government goes ahead with its proposal to outlaw red-lining, according to the Transvaal Agricultural Union (TAU).
Red-lining is the practice by banks and other financial institutions of excluding certain geographical areas from access to housing finance.
In its latest South Africa Bulletin, the TAU said if red-lining was outlawed, it meant that banks would be forced to lend to risky mortgage holders, and ”they will of course recoup their losses from those customers who do not default”.
”If some property will not be gauged on its market value and viability as a repayment vehicle, why not other property?
”Why should some citizens be subject to the rigours of a tough capitalistic climate and not others?
”There may be a case here for the Constitutional Court, where farmers, for example, who have been refused finance for their properties could cite a lack of equal justice for all citizens.
”They after all are also ‘victims’ in a sense — victims of the vagaries of the weather, world food prices, theft, increased input costs and so forth. They are also ‘disadvantaged’,” the TAU said.
In May, Housing Minister Brigitte Mabandla told members of Parliament in the National Assembly that access to finance remained the greatest challenge to low-cost housing development, and financial institutions needed to play a bigger role in this regard.
She said the draft Community Re-investment (Housing) Bill, which would place a number of obligations on banks regarding low-income housing, ”is sure to be passed into law during the course of this year”.
According to housing department officials, the bill would effectively outlaw geographical red-lining by banks. – Sapa