Setting It Up
The Case for Security of Tenure

Adapted from:
Land, Security, Property Rights and the Urban Poor: Twenty Five Years of World Bank Experience. World Bank Briefing Note 8. 2001

Improving the living conditions of the poor depends most directly on:

• having legal recognition to the use of property,
• freedom to trade and collateralize land,
• acquisition of infrastructure services with minimal transactions costs.

Access to land, services and credit are central to many development agency programs, and are key to efforts to address the problems of the urban poor. Regularizing tenure also facilitates greater private sector involvement in the provision of services for the urban poor, and a wide range of projects and non-lending instruments have evolved to do so.

Common to all development projects are the following underling assumptions, principles, and objectives relating to secure tenure:

• Dysfunctional land markets and/or land registry contribute to the proliferation of squatting and formation of slums, residents of which are without neither rights nor access to services. These settlements, with squalid, unsafe and unhealthful living conditions, sap residents' productivity and employment options.
   
• Illegal / unregistered parts of cities are inefficient and/or dysfunctional in which residents and businesses do not contribute to municipal revenues, exacerbating their ability to provide services.
   
• Provision of legal tenure is fundamental to shelter (new housing) projects redressing bottlenecks in access to, and supply of, land for the poor.
   
• Security of tenure is essential to improve (upgrade) the living conditions in existing squatter areas, slums, etc. allowing residents to capture assets, make home improvements and seek credit.
   
• Legal / official recognition of residents in squatter settlements is pivotal to transforming the "illegal or marginal" into citizens with rights and responsibilities.
   
• Illegal slum neighborhoods are under-serviced, officially neglected “cities within cities”, which compound environmental and efficiency problems city-wide, and strain the capacity of local governments to keep pace with growth and provide municipal service.
   
• Conversely, legally registered communities, are more attractive to private providers of services, utility companies, etc.
   
• Lack of legal status severely limits the poor's access to credit, financial services, and curtails entrepreneurial abilities.
   
• Strengthening legal status helps expand residents' existing social capital, and access to shared credit.
   
• Legalizing slums and slum dwellers unleashes the tremendous human and economic potential of the informal or extra-legal city residents.
   
• If some form of tenure is obtained, low income households show willingness to and ability to pay for land and services they value, thus undercutting the premise of traditional subsidies.
   
• The provision of basic services with secure tenure leads to substantial private investment in home construction (on average, each $1 invested in infrastructure generates $7 of household investment) and contributes to a vitalized local economy.
   
• Security of tenure give poor residents a better chance of realizing land market gains after neighborhood improvements.
   
• Regularizing land occupancy facilitates property taxation for municipal governments.
   
• The usufructory rights accorded through acquiring infrastructure services strengthen residents’ ultimate claim to tenure.
   
• As one result, some private developers (i.e. El Salvador) have replicated land and services models at a large scale.