Informal land markets are the way in which most households in cities in the Global South get access to land and housing. Although these markets can function fairly well, they have a number of disadvantages related to their lack of documentation, and a number of interventions should be undertaken to improve informal land markets. It is also important for city governments to consider urban land markets in their totality to ensure sufficient affordable land within cities. This paper reviews the literature on informal land markets and discusses different approaches to engaging with informal land markets to improve land access and tenure security.
This review is part of the Global Review Series on Informality. It starts with a discussion of urban land and a review of different types of tenure security on the formality: informality continuum, ranging from informal land rights, through occupancy certificates and other temporary rights (such as rental or long-term leasehold), full individual or communal ownership. The paper then discusses key segments within informal land/housing markets (informal occupation in informal settlements, informal rental or subletting, and informal sale of formal residential properties), and the challenges associated with informality, such as inadequate security of tenure and overlapping land rights.
Enhancing informal land markets is an important strategy for reducing poverty. The paper then examines six key interventions through which city governments can intervene in informal land markets to improve the security of tenure and access to land:
Collecting data on land through participatory processes and innovative use of technology.
Reforming urban laws and adopting a “whole of market” approach to monitoring and intervening in the urban land/ housing market to make it work better for the poor.
Upgrading the security of tenure of informal settlement residents (for example, through a moratorium on evictions and through documenting current rights and issuing occupancy certificates).
“Replicating” the advantages of informal land market processes through managed land settlement programmes.
Supporting owners of formal residential properties to undertake formal transactions.
Improving the security of tenure for informal tenants while promoting the supply of adequate small-scale rental housing.
Main Messages
Informal land markets are the way in which most households in cities in the Global South get access to land and housing. Although these markets can function fairly well, they have a number of disadvantages related to their lack of documentation, and there are a number of interventions that should be undertaken to improve informal land markets.
Enhancing informal land markets is an important strategy for reducing poverty. City governments can undertake a wide range of interventions to make land markets function better and enhance the security of tenure for residents.
Six key interventions are examined through which city governments can intervene in informal land markets to improve the security of tenure and access to land: undertaking data collection as a first step in being able to intervene in land markets; reforming the formal, legal, state-recognized land system to be more widely applicable and useful for the poor; upgrading tenure; implementing managed land settlement programmes; supporting owners of formal residential areas to undertake formal transactions; and improving the security of tenure for informal tenants and promoting the supply of adequate small-scale rental housing.
Ultimately, we need to work towards land markets that work better for the poor, where households can access a variety of different options with adequate shelter and adequate services in suitable locations at an affordable cost and with a reasonable de facto security of tenure, and where more households can have legally recognized tenure so that they have greater long-term security and that owners of property can sell their properties at reasonable prices when they wish to.
The key principle is that interventions need to be based on a good understanding of existing informal market processes and participatory engagement with the residents concerned.
