Regulating Urban Land Markets: Mission Impossible?
| There is no lack of land. The problem is dysfunctional land markets, misguided regulations and a lack of pro-active management policies.(20)
The main technical difficulties involved in providing land for the urban poor concern: a) locating and acquiring enough buildable land; b) devising sustainable ways of financing its transfer to the poor; and c) regulating the functioning of land markets.
An alleged shortage of land has been a main obstacle to more effective housing policies for the poor. The need to safeguard environmental and agricultural land from chaotic urban expansion is a genuine concern. However, most cities still have buildable land in good locations, but it is owned or controlled by private interests or by state agencies with no interest in socially directed uses of the land. The real shortage is thus not of land, but of serviced land at affordable prices.
Meeting the land needs of the poor is easier in the context of well-regulated land and housing markets. Not only do effective markets make more land available to the poor, but they also favour economic growth.
Lack of good regulation actually increases poverty: Metre for metre, people in informal settlements pay more for land and services than people in wealthier residential areas.(21)Unregulated markets also make it difficult for governmental bodies to collect property taxes or reduce land speculation and to build up resources on this basis for socially oriented planning of land use (see Box 16).
The problem is not so much the shortage of land or the number of poor urbanites, but rather their restricted access to serviced land and housing because of distorted land markets.
Servicing already settled areas costs more than providing serviced land on unoccupied sites. Yet public authorities, pleading insufficient funds, seem to find smaller investments in ex post facto programmes more appealing than well-planned proactive policies. Much could be done to improve the situation, for instance, by enacting special legislation for the provision of adequately serviced land for low-income groups. Cities could finance urban development by taxing increases in land value resulting either from public investment in local urban infrastructure or services, or from the redefinition of land uses towards more profitable ones, such as changes from rural to urban or from residential to commercial uses.
The urban poor tend to be treated as if they were passive in the production and consumption of land, yet they have some capacity to pay for land, despite their low and unstable incomes. Indeed, the poor already pay very high prices for the housing they find through the informal market. This capacity to pay could be better mobilized through formal regulation and provision of plots of land.
Scarcity of land or financial resources is thus not the only obstacle to the implementation of sustainable policies. In a sense, poor people have to be protected from the abusive practices of developers who capitalize on services provided by the local communities or by the public sector. Political will, as well as managerial and technical capacities, are needed to identify, capture and properly invest available resources—including the resources of poor people themselves—into more equitable urban development.
Financing socially oriented housing has always been difficult, but there is no shortage of innovative proposals, once past the hurdle of anti-urban bias. Given regularized land markets, the support of local governments, NGOs and international funding agencies could be marshalled towards a more proactive approach.
International and multilateral agencies could make a difference. New rules for the United Nations system, promulgated by the Secretary-General in August 2006, will enable the UN to address this structural shortcoming and provide more effective support on affordable housing finance. That support will include pro-poor mortgage financing systems, now being tested in the field, as an alternative to conventional social housing policies.(22)Particular attention will have to be given to the gender constraints that exist in formal credit channels precluding women from tapping into this market. Access to microfinance has proven to buttress women’s empowerment and helps to reduce urban poverty.