Reverting to Informality: Unregistered Property Transactions and the Erosion of the Titling Reform in Peru
23 Pages Posted: 28 Jul 2016 Last revised: 22 Sep 2016
Date Written: September 20, 2016
Titling programs have focused only on providing initial tenure security, but have not paid attention to the process of maintaining the formality of future property transactions. Evidence shows that properties become de-regularized due to unregistered transactions in urban slums, reducing the households’ ability to reap the potential benefits of tenure security in the future. We exploit a natural experiment provided by the elimination of a registration system targeted to the poor in Peru to identify the effects of increasing the costs and complexity of registering property transactions in urban areas. We found that the elimination of such system led to a significant reduction in the probability of registering a transaction, including those transactions that involved a change in ownership. This presents an important threat to maintaining the benefits of the titling reform in the long run.
Keywords: property titling; informality; transaction costs; Peru; Latin America
JEL Classification: K11; O12; O17
Suggested Citation: Suggested Citation