informal housing in chinese cities - land...

1 Challenge the future

Informal Housing in Chinese Cities

Dr. Li Sun

Postdoctoral Researcher at TUDelft

Consultant to the World Bank, UN, OECD


Contents

• Informal settlements at a glance

• Informal housing in Chinese cities

• Empirical findings


Informal settlements at a glance

• Globally, between 30% and 50% of residents in urban areas lack legal security of tenure.

• More than one billion people live in informal settlements, a

number estimated to grow to 1.4 billion by 2020.

• Informal settlements are context-specific:


Informal housing in Chinese cities

Estimate indicates informal housing accounts for one third of total housing units in urban China.

This type of housing cannot be granted legal titling because its development violates the laws on land, planning, and real estate.


Why informal housing is prevalent?

• The increasing demand for housing in cities. Between 1978 and 2013, the urban population more than quadrupled from 173 million to 734 million.

• The affordability of informal housing relative to formal commercial

housing. On average, housing prices of informal housing were 50% of that of formal housing in nearby neighborhoods.

• The lack of social housing provision in China.

Urban poor and migrant workers are the main buyers.


Empirical findings

In 2013 and 2014, fieldworks were conducted in seven provinces and municipalities: Beijing, Tianjin, Guangdong, Chongqing, Shaanxi, Jiangxi, and Gansu. Informal housing buyers were targeted as the respondents for the questionnaire. The survey samples consist of 300 respondents in total, and the number of valid samples was 291.


Perceived property rights

• Like informal settlements in many other countries, the lack of legal tilting is the key feature of the informal housing in China.

• 90% of interviewed informal housing buyers said they and their families are the owners.

• 74% of respondents believe the ownership of their housing can be proved by…


Different forms of purchasing contracts of informal housing ( Not legally binding )

Note: The seal and signature are made blur purposely to protect privacy.


State-Owned Land Use Certificate of the PRC

Property Owner’s Certificate of the PRC

62% of respondents said they were aware of the difference between the purchasing contract and Certificates of formal housing .


Does legal titling matter from the perspective of informal housing buyers? De Soto and his supporters point out that there are a number of benefits to be derived from having a legal title:

•Investment

•Access to credit

•Transaction value

•Probability of eviction

However, our empirical data indicates the importance of legal titling is not significant to informal housing buyers. The lack of legal titling does not affect their behaviors during daily life.


• Investment Legal titles motivate buyers to invest in the property(?)

Informal housing buyers spent a significant amount of money on

renovation, decoration, and furnishings.

The lack of a legal title does not hinder their investment in the informal housing,

therefore, legal titling does not matter in this context.


Before decorating and furnishing

Source: taken by Li Sun


After decoration and furnishings

Source: taken by Li Sun


• Access to credit

Legal titles provide collateral in credit operations(?) While a majority of migrant workers have no experience in getting loans

from banks, 67.4% participated in informal borrowing. Informal financing is regarded as a common practice.

With or without legal titles, informal housing will not affect their access to credit,



• Transaction value of the house Legal titles increase the transaction value of the property(?) The buyers, mainly migrant workers, low income urban residents,

regard the informal housing as “homes” instead of commodity for trade.

There are few possibilities of any further transaction of the informal housing,



• Probability of eviction

Legal titles decrease the fear of eviction(?) While fear of eviction might logically be an obstacle for citizens to

purchase an informal property, only 1% of respondents feared that the government might eventually evict them from their housing.

Forced eviction would lead to social unrest. Stability maintenance is

regarded as an important issue by the Chinese government, therefore, legal titling does not matter in this context.


Why?

• 95% of respondents answered that they purchased informal housing

for a place to live and to have a sense of “home” in cities. • The main function of such housing is that it fulfills the demand for

affordable and decent housing by low income groups.

• Informal housing functions as a form of non-state welfare because state provided social welfare on housing is generally unavailable.

• Informal housing grants low income groups’ rights to housing in Chinese cities.

Function matters


Thank you for your attention

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informal housing in chinese cities - land...

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