Why it Matters
WHY DOES PROPERTY REGISTRATION MATTER?
Registered property rights are necessary to support investment, productivity and growth (1). Cadastres or surveys, together with land registries, are tools used around the world to map, prove and secure property and use rights. These institutions are part of the land information system of an economy. Land and buildings accounting for between half and three-quarters of the wealth in most economies (2), thus having an up-to-date land information system is vital.
Evidence shows that owners with property registered titles are more likely to invest in the local economy. Furthermore, increase in land value and land efficiency is often observed. In Nicaragua, having a formal title not only made owners more likely to invest but increased land values by 30% (3). Following a land titling project in Thailand, property increased in value by 75–197% after being registered (4). As part of a national experiment in 2008, Chengdu prefecture implemented ambitious property rights reforms, including complete registration of all land together with measures to ease transferability and eliminate migration restrictions. It was found that reforms significantly reduced the threat of reallocation or expropriation, thus facilitating more efficient land use, either through investment or by transferring land form less to more efficient uses and users. This resulted in higher shares of agricultural and construction land being used for arable and economic purposes (5).
Furthermore, owners with properly registered titles are more likely to engage in the economy’s workforce and boost productivity. It has been found that formal property market encourages employment by increasing domestic stability and decreasing likelihood of evictions in poor urban areas. Between 1996 and 2003, the Peruvian government issued a series of legal, administrative, and regulatory reforms aimed at promoting a formal property market in urban squatter settlements in eight cities. Pre-program squatters in program neighborhoods were 60 percent more likely to report improved tenure security, as a result, the median squatter was able to work 16.2 (6).
The benefits of land registration go beyond the private sector. For governments, having reliable, up-to-date information in cadastres and land registries is essential to correctly assess and collect tax revenue. In Thailand, where annual revenue from property and transfer taxes rose from $200 million in the 1980s to $1.2 billion by 1995, a land titling program that increased the number of registered property owners during the 1980s is perceived to be one of the reasons for the increase (7).
With up-to-date land information, governments can map the different needs in their cities and strategically plan the provision of services and infrastructure in the areas of each city where they are most needed (8). Land information can also help in planning the expansion of urban areas. This is especially important in economies prone to natural disasters. When there’s no planned urbanization, informal dwellings and slums abound, even in areas that surveyors identify as being at high risk from disasters. Tools such as cadastres and survey maps can be used in city planning, as part of the land information system of a city, to avoid or mitigate the effects of environmental or climate-related risks on urban populations.
1. Deininger, Klaus. 2003. Land Policies for Growth and Poverty Reduction. World Bank Policy Research Report. New York: Oxford University Press.
2. World Bank. 1989. World Development Report 1989. New York: Oxford University Press.
3. Deininger, Klaus, and Juan Sebastian Chamorro. 2002. “Investment and Equity Effects of Land Regularization: The Case of Nicaragua.” World Bank, Washington, DC.
4. Burns, Anthony. 2002. “Land Registration to Improve Security, Transparency, Governance & Sustainable Resource Management.” In “Comparative Study of Land Administration Systems,” World Bank Asia Regional Workshop on Land Policy and Administration working paper, World Bank, Washington, DC.
5. Deininger,Klaus W.;Jin,Songqing;Liu,Shouying;Shao,Ting;Xia,Fang. 2015. Impact of property rights reform to support China's rural-urban integration : village-level evidence from the Chengdu national experiment. Policy Research working paper,no. WPS 7389, Paper is funded by the Knowledge for Change Program (KCP). Washington, D.C. : World Bank Group.
6. Field, E. (2007). Entitled to work: Urban property rights and labor supply in Peru. The Quarterly Journal of Economics, 122(4), 1561-1602.
7. Burns, Anthony. 2002. “Land Registration to Improve Security, Transparency, Governance & Sustainable Resource Management.” In “Comparative Study of Land Administration Systems,” World Bank Asia Regional Workshop on Land Policy and Administration working paper, World Bank, Washington, DC.
8. Property information held in cadastres and land registries is part of the land information available to governments. Land information also includes other geographic, environmental and socioeconomic data related to land that are useful for urban planning and development.