Large-scale land registration programmes

In many low-income countries, the process of land tenure regularisation is frustrated as individuals are expected to register their own ownership claims, often through lengthy, complicated and expensive registration processes. In Lagos, for example, titling expenses can reach 30% of construction costs. 12

By contrast, cross-country experiences show that large-scale government-funded registration programmes are far more cost-effective, avoiding repeated and costly surveyor visits to the same area. In Tanzania, surveying at scale is over 20 times cheaper than surveying single parcels.13 Furthermore, land rights have strong public benefits, such as supporting rule of law, functioning land markets and enabling land taxation, which individuals do not take into account when deciding whether to register their land. Government funding is therefore required to capture these benefits. This can be seen as a long-term investment in future revenues, requiring a significant initial outlay on surveying costs, but enabling large and increasing long-term revenue flows through broad-based land and property taxation.

Process for Land Tenure Regularisation Programme in Rwanda

In implementing such registration programmes successfully, key steps in the decision-making chain are:

1) Awareness-raising on land registration

Awareness-raising before embarking upon large-scale registration programmes is often necessary to ensure the public understanding of the legal rights and responsibilities that come with formal property titles. Where owners are not informed of their rights, this leaves them vulnerable to sell off land at below-market prices. Where owners are not informed of their responsibilities, they may be reluctant to pay for property taxes or utility connections. Public awareness-raising can also help to build the political support that is often vital in overcoming significant political hurdles to the process.

2)  Mapping and surveying land plots

Mapping and surveying procedures typically constitute over 50% of the cost of land registration programmes. Close scrutiny over the cost-efficiency of this process is therefore integral to enable governments to recoup their investments from land-titling in taxation. Without such scrutiny, surveying professionals may recommend expensive, state of the art technologies both unnecessary and unsuited to low-income contexts. In Tanzania, expensive cadastral surveying procedures result in costs of up to $6,000 per parcel for one-off visits, and up to $160 for large-scale systematic demarcation. 14

One way to reduce the costs associated with official mapping and surveying procedures is to issue intermediary collective land titles which do not require internal boundary demarcation, or, as implemented recently in Namibia, to create a parallel land registration system for titles that fall short of full ownership. However, in many ways more sustainable is to reduce the cost and complexity of issuing full freehold or long-term leasehold titles. In Rwanda, during the 2009-13 Land Tenure Regularisation programme, mass participatory exercises were conducted with locally trained parasurveyors based on aerial and satellite photographs. Freehold and leasehold titles were issued for almost all of Rwanda’s estimated 10.3 million land in a space of five years, and at an average cost of only $6 per parcel.

Participatory demarcation of land boundaries, using satellite images or aerial photographs, has proved successful in lowering the costs of mapping and surveying across the developing world (see above, taken in Jalalabad, Afghanistan. Credit: Flickr, USAID)

3) Adjudicating between competing ownership claims

Where possible, competing claims over land are best resolved through formal legal proceedings. However, where such institutions lack the capacity or required documentation to effectively adjudicate between claimants, local dispute-resolution mechanisms can be more effective. In Rwanda, after initial mapping and surveying was carried out in the presence of local residents, any dispute unable to be resolved either on the day of the survey or after a 60-day mediation period was taken to local judicial authorities (abunzi). The open nature of dispute resolution, combined with the legitimacy and close community ties of these authorities, helped to prevent opportunistic ownership claims being lodged after the programme was announced.

However, particularly in the case of large-scale disputes between landlords and occupiers of informal settlements, there may be a need for more active government involvement. There are typically two options in these cases: awarding land rights to informal settlers, which usually happens in the context of slum upgrading programmes, or awarding land rights to landlords and resettling occupiers in a different location.

Where policymakers are content to retain land under residential use, slum upgrading is a cost-effective solution that can enable informal settlements to incrementally transform into dense and liveable neighbourhoods, integrating the city’s low-income workforce into the urban fabric. However, where existing land use is highly inefficient from a city-level perspective, resettlement frees up land for more productive purposes, including vital urban infrastructure, and commercial real estate to form the city’s employment engine. On the other hand, without the financial resources to adequately rehouse displaced residents in well-connected locations, such resettlement programmes typically leave residents excluded from the social and economic fabric of the city. In many cases, the majority of resettled residents have simply chosen to move back to more slums where they have social ties and economic opportunities. 15

Resolving disputes early: Land registration on the urban periphery

The simplest and most cost-effective policy option to avoid the large-scale land disputes that currently characterise many urban informal settlements is to clarify ownership before large-scale settlement has taken place. This can be achieved through a proactive process of registering land ownership claims on the urban periphery, in advance of urban expansion. This can be accompanied by government purchase of cheap land on the urban periphery to fit core infrastructure and housing foundations in advance of settlement. Planning such infrastructure in advance can be three times less costly than retrofitting after informal settlements have formed.

Both of these options may require policymakers to address the vested interests of individuals who have been able to extract significant rents through strong de facto, quasi-legal ownership claims. In many cases, legal and political challenges from vested interests may require claims to be bought out through compensation. This compensation is expensive, but represents the price of clarity over land rights. In the long run, such compensation can be far less costly than the wasted productive potential that results from contested tenure arrangements. In Kibera for example, the cost of current land-misallocation amounts to over $1 billion. Auctioning off this land to property developers would provide a windfall large enough to compensate slumlords at the value in perpetuity of future rent payments and obtain a surplus of $13,000 per household. This would be more than enough to help to relocate tenants currently paying an annual rent of $260 per household. 16

Aside from traditional options for resolving competing claims, land-sharing agreements could represent an innovative alternative solution. Under these agreements, slum dwellers can be rehoused on part of the contested land in medium-high rise housing, with housing and infrastructure costs subsidised by landlords who benefit from the liberation the rest of the disputed land for commercial or higher-value residential development. In Bangkok, Thailand, during the 1970s and 1980s, government officials brokered seven such land-sharing deals between slum dwellers and landowners to achieve win-win solutions.

4) Ensuring continued use of the formal system

Costly investments in land registration risk being undone unless governments can ensure continued use of the formal system to register property transfers. In Buenos Aires, a large-scale land titling programme unlocked significant investment and property tax revenues, but these gains risk being reversed through a process of ‘deregularisation’ – 78% of property transfers since registration have taken place informally. This is hardly surprising since the cost of a formal property transfer was approximately 30% of property values in recently titled areas.17 For land to remain formally registered, formal procedures for land transfer will therefore need to be be cheap, accessible and not overly burdensome, in turn requiring ongoing efforts to streamline land administration.

Footnotes

  • 12 World Bank, 2015, “From Oil to Cities: Nigeria’s Next Transformation. Nigeria Urbanization Review” Washington DC: World Bank
  • 13 Ali, D. A., Collin, M, Deininger, K., Dercon, S. and Sandefur, J. (2014). “The Price of Empowerment Experimental Evidence on Land Titling in Tanzania,” CSAE Working Paper, WPS-2014/23
  • 14 Ibid.
  • 15 Barnhardt, S., Field, E. and Pande, R. (2017) “Moving to opportunity or isolation: Network effects of a randomized housing lottery in urban India”, American Economic Journal: Applied Economics: 9 (1)
  • 16 Henderson, V., Regan, T., Venables, T. (2017). “Urban Transition and Institutional Frictions”, March 2017 Working Paper
  • 17 Galiani, S. and Schargrodsky, E. (2016) “The Deregularisation of Land Titles’, NBER Working Paper No. 22482