INCLUSIVE, SAFE, RESILIENT

AND SUSTAINABLECHRYSSY POTSIOU LOOKS AT HOW SURVEYORS AND GOVERNMENTS CAN ADDRESS THEPROBLEMS OF ‘INFORMAL SETTLEMENTS’ TO IMPROVE PRIVATE INVESTMENT, INCREASEACCESS TO CREDIT AND REDUCE POVERTY

When hearing about ‘informal settlements’, pictures of the corrugatedmetal and cardboard houses of African slums or the favelas of Rio deJaneiro may come to mind. However, the term has been used to refer tounregulated construction, arising from the regulations in different countries,including unplanned, unauthorised, illegal or squatter settlements. Thefact that depending on the definition of ‘informal’used, an estimated 40to 70 per cent of urban dwellers in the developing world live in extra-legalsettlements shows how widely the extent of the phenomenon can varyaccording to how it is defined.

Hernando de Soto’s theory proposes that housing is important not onlyas a shelter to protect people from the elements but also as a tool to createwealth when used as collateral. Therefore clearly defined and registeredproperties, rights and responsibilities, as well as access to services, opensdoors to private investment; this improves access to credit and leads toreduction in poverty. FIG and surveyors understand the importance of thatand are at the centre of this activity.

The importance of addressing informal housing is underlined in theproposed United Nations Sustainable Development Goal 11, which stressesthat cities and human settlements should be inclusive, safe, resilient andsustainable. Surveyors are actively engaged in aiming to identify andeliminate the barriers that are within the their areas of expertise. They

can assist in the establishment of sustainable housing mechanisms inissues such as the adjudication of right holders; registration and recordingprocedures; property valuation; and land use planning and permitting. Theyalso have the vision and determination to make sustainable growth happen.

The privatisation reform in Europe and Central Asia (ECA) was thegreatest in history. It included 30 countries, US$1.1 billion in loans andgrants, and affected a population of 900 million and a land of 27.4km2.About 300 million properties were surveyed and registered, mostly inautomated cadastral systems. Much of this land was given ‘free of charge’or at ‘low cost’, a policy that promoted economic transformation. Manycountries of the region now have made remarkable economic progress.

However, property markets in the many of the members of theUnited Nations Economic Commission for Europe (UNECE) still needimprovements. At the joint FIG/UNECE conference in 2007, it wasestimated that more than 50 million people lived in informal settlementsin UNECE. These informal settlements were not registered in propertyregistration systems, and so could not be mortgaged, formally transferred,inherited or rented. Moreover, most of these informal settlements werenot subject to taxation. ECA reforms were at risk, as the increasing amountof missing information impeded sound decision-making, while settlerswere deprived of access to capital and credit.

24 March 2016 | GeoConnexion InternationalMagazine

FIG UPDATE

NewpoliciesMany countries, encouraged by FIG andUNECE, have reconsidered their policies. Wherepossible, they initiated formalisation projects tounblock people’s wealth. Formalisation includes:• Privatisation of occupied state-owned land• Determination of compensation foroccupied, privately-owned land.• Regularisation and planning upgrades.• Revising zoning and planning, as well asdeveloping regulations and standards.• Controls and improvement of individualconstructions.• Provision of ownership titles and registrationin property registration systems, allowingproperty transactions and mortgages.

In 2011, it was realised that greater efforts toimprove formalisation, and prevent futureillegal construction, are needed in UNECE.

The 2015 joint FIG/UNECE publication,Formalizing the Informal: Challenges andOpportunities of Informal Settlements in South-East Europe, examines the causes of informalhousing in five UNECE countries – Albania, theRepublic of Cyprus, Greece, Montenegro andthe Former Yugoslav Republic of Macedonia– and assesses the formalisation procedures.Based on this assessment, the study makesrecommendations to improve formalisation. Italso contains lessons useful to other regions.

The main reason for the developmentof informal settlements is poor publicadministration and weak property markets atcountry level. When neither the governmentnor the private market efficiently providefor formal housing, people turn to informalsolutions. Ecological and other concernsimposed by the country’s constitution canexacerbate the problem, such as difficultiesin transforming agricultural land into land forconstruction or difficulties legalising informalsettlements in forested areas.

In all the countries examined, bar theRepublic of Cyprus, there is a lack of policies toproduce modern affordable housing. Formalhousing markets provide expensive housing,but with few options for the lower and middle-class populations. FIG aims to raise awarenessabout policies that do not conflict with therequirements of a free market, but unblock thewealth of the people.

Finally, it was identified that displacedpopulations in some regions have not yetbeen formally integrated in local societies, andtherefore cannot equally enjoy the benefits ofprivatisation and formalisation. Furthermore,planning and construction applications aretime and/or cost consuming in the countriesunder review, and therefore cannot satisfyexisting demand.

RecommendationsBased on these findings, the mainrecommendations for an efficient formalisation are:• Strengthening of private property rights.• Development of mechanisms to providetitles for all properties where residents

have long-standing tenure and to improveinformal properties. This is a great part of acountry’s wealth and so there is an urgentneed for housing markets to become formal.• Adoption of low or no fees or formalisationcosts. This will enable occupants toparticipate in a self-declaration formalisationproject and declare their informal real estate.• Provision of subsidies or tax exceptions andeasy, low-cost authorisation, to encourageenergy-efficiency and stability improvements.• Only when properties are privatised,registered and allowed to be mortgaged ortransferred will the occupants of informalreal estate be able to obtain credit, andproceed with necessary improvements.• Planning, environmental, safety andimprovement standards should be set,following title provision and registration.• There is a need to make existing planning,building permitting, and zoning systemsmore flexible and pro-growth.• The occupants of both legal and illegalconstructions need to be aware of theadvantages of formalisation, and the necessaryprocedures to legalise informal property.• The public must trust in the long-termviability of a formalisation project.• Those who are ‘legal’ and own a formalhouse should also understand the greateconomic, social and environmental benefitsof the formalisation of informal houses tointegrate them into the economy, such asenabling energy and other environmentalimprovements, and should not oppose it.• Countries should agree on fit-for-purposeguidelines for formalisation purposesand should agree on property and landmeasurement standards to better serve themarkets and allow for credit.• Affordable housing policy should beavailable, to reduce the demand forinformal development; the contribution ofthe private sector is important and its roleshould be defined by clear rules.

More details about the studymay be found at:www.fig.net/resources/publications/un/2015_formalizing_the_informal.asp

THE MAIN REASON FORTHE DEVELOPMENT OFINFORMAL SETTLEMENTSIS POOR PUBLICADMINISTRATION ANDWEAK PROPERTY MARKETSAT COUNTRY LEVEL

Chryssy Potsiou is the president of FIG(www.fig.net)

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