LETTER: If banks can’t rely on property as security, the economy will die

One wonders how diligently the consequences of expropriation without compensation have been explored. For example, there is a suggestion that in the event of a bonded property being expropriated without compensation the [borrower] would still be compelled to repay the outstanding capital, which would be difficult if not impossible for most.

But it goes much further than that since a bank wIll not permit transfer of a bonded property until the bond is paid up, not willingly wishing to forfeit its security (or is the state also contemplating forcing banks to do so?).  In a situation where a bank cannot rely on property as an ongoing security it would be reluctant (to say the least) to grant what would  be large long-dated unsecured loans, so imagine then the effect on the banking system, business, development and home ownership, and the inevitability of the economy grinding to a halt and disappearing down the plughole.

Expropriation without compensation is a can of worms, the effects of which are still not fully understood.

Sydney Kaye

Cape Town