Reverting to Informality

Unregistered Property Transactions and the Erosion of the Titling Reform in Peru

by Italo A. Gutierrez, Oswaldo Molina

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Titling programs have focused mostly on providing initial tenure security and have not properly addressed maintaining the formality of future property transactions. Our data indicates that properties become de-regularized due to unregistered transactions in urban slums, which threatens to undo the success of the titling program in the long run. We exploit a natural experiment provided by the elimination of a streamlined registration system targeted for the poor residents in Peru to identify how costly and burdensome registration policies can increase de-regularization. Our analysis indicated that the elimination of such a system led to a significant reduction in the probability of registering transactions, including those that involved a change in ownership. Overall, our findings stress the necessity of building specific components aimed at maintaining properties formal into the design of urban titling programs.

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