Facilitating access to land property rights: Reform of land policies, institutions and norms in Peru -- Habitat for Humanity Int'l 1
Facilitating access to land property rights: Reform of land policies, institutions and norms in Peru
By Maria Luisa Zanelli
This article addresses the historical framework of the land title reforms; how the reforms dealt with various barriers to property rights access by changing procedures, timing, costs and institutions; and the impacts that legislative reforms have had on the overall conditions of the poor in Peru in terms of housing, land and economic opportunities.
Security of tenure is pursued and encouraged in the international arena to improve the living conditions of some 100 million slum dwellers in the world for the next ten years, and to promote legislative reforms, pro-poor policies and tools, and efficient and transparent management and administrative systems.
Overview of reforms in Peru
In 1996, a project entitled “Peru: Property Rights” (PPR) was initiated to change policies and procedures to enable more than a million urban poor and very poor families to acquire secure land rights within five years.
The elected Peruvian president was strongly committed to the formalization of property rights in poor settlements as one of the main goals of his political agenda for national development and as a tool to overcome poverty.
Previously, in 1988, various other initiatives had been implemented to begin to address land issues such as a series of studies, participatory exercises and small-scale regularization programs, including the creation of a new public registry for informal settlements — the Registro Predial Urbano (RPU) . These were promoted by a private research institute, Instituto Libertad y Democracia-ILD, which influenced the PPR approach .
The PPR project was carried out through a loan of US$38 million from the World Bank and a contribution of US$24 million from the Peruvian national government for a five-year term. The Law to Promote Access to Formal Property was passed in March 1996 to apply the new system to urban settlements of the main cities and urban areas of the country. The PPR project developed three components:
- Urban property markets reforms
- Work through two key autonomous national institutions responsible for formalization:
- i) COFOPRI was created to implement the law, with the function of issuing titles on the basis of legal and physical studies; and,
- ii) The existing RPU (public registry for human settlements) to strengthen the massive registration of titles issued by COFOPRI
- The implementation of the National Formalization Plan including the conversion of existing informal property to securely delineated property rights, requiring documentation of all the processes, staff recruiting and execution of field campaigns, all supported by fieldwork and the collection of data.
The World Bank has qualified the PPR as a “flag-ship project” because financial and technical standards were achieved, and qualitative and quantitative goals were accomplished in a timely, cost-effective manner.
Historical framework to the reforms
Prior to the reforms:
1) The existing processes for land regularization were not properly designed to define and create legal security. In 1996, more than a million properties in Peru were informally held or occupied. Fifty percent of those informal properties were in or around Lima, the capital. Privately registered land owners, peasant communities and state agencies were claiming rights on the occupied land.
2) Over-regulated and bureaucratized processes and systems meant extremely slow and inefficient practices, resulting in a lack of transparency and further corruption. The municipal offices of urban planning and zoning, offices of land regularization and other similar offices had good intentions and possibly good plans. However, these entities did not make successful decisions, and thus achieved few results to positively impact the needs of the poor (see Charts 1 and 2).
3) The processes and transactions resulted in extremely high costs that were impractical and beyond the reach of most of the nation’s population.
4) Political and social conflicts and endless judicial processes had historically been a problem for the Peruvian population when trying to get a title and register their properties.
Implementation of reforms
1. Three features were in place to implement the needed property rights reforms:
i) political decision and commitment at the highest level;
ii) financial resources; and
iii) a specialized technical body with the capacity to design the strategy and new legislations, and facilitate the debate with different sectors like similar-minded political parties with seats in the Congress, community organizations’ representatives, union leaders, university authorities and relevant influential professionals.
2. These three features were critical to create, put in place and strengthen an enabling legal framework. A strategic startup of the PPR was the mechanism to pass a legislative decree (Decree Law 803) as the initial reform. This reform had two purposes:
i) to declare the formalization of property rights as a strategy to fight against poverty, and
ii) to create COFOPRI as the sole titling authority at the national level, with budgetary autonomy.
Reforms in brief
1) The newly established reforms improved processes and standards that included digitalized mapping, and gathering and collecting legal information about the area through community leaders and various agencies (including the judicial system, national registries and several other public agencies). Along with the processes, a categorization of the existing legal status of the land to be formalized was established. Six main conflicting statuses were identified:
i) public land
ii) private owned land
iii) peasants’ community land
iv) archaeological land
v) mining companies claimed land
vi) high risk areas
Each status required a specific legal framework, technical resources, methodology and interaction with third parties in order to be formalized. At the local level, the steps included a house-by-house census to gather proof of possession documents for analysis, the publication in the community of potential future titling beneficiaries (to allow other members of the community to dispute individual claims to the land) and, finally, cross-referencing of information with a historical database on titling.
The property studies, titling and registering process supported the whole effort to “clean up” the legal status of land, formalizing properties recognized as legitimate and accepted by the market.
2) Reforms called for the reengineering of processes to be more effective, proactive, simplified, low cost, flexible, innovative and transparent, with economies of scales enabling a large scale approach. Many steps in titling and registering procedures were outsourced to third parties for greater effectiveness and to reduce costs. Community participation and social control were stressed as key to efficient and low cost transactions.
3) The reforms under PPR recognized the value of community-sanctioned ownership norms, admitting customary proofs of ownership in the definition of property rights for abandoned married women, widows, marriages and possession, among others. For example, the use of documents that are readily on hand and available to the poor (relevant for conflict/disaster contexts) like neighbors’ affidavits, certificates, photos, bills and any relevant “informal” proof).
4) The PPR project called for community participation for conflict resolution, mediation and reconciliation within an arbitration system at the administrative level, organization of proofs of possession and feedback on potential adjudicators. Participatory techniques have been essential to this project, both in the design of the new system and in the day-to-day implementation of the formalization process.
It took COFOPRI five years to issue and register over 1 million titles, benefiting around 5.5 million urban dwellers. The average cost per title was less than US$50, and no fees were charged to the new owners. The highest peak attained by COFOPRI was during its fourth year (2000) when COFOPRI issued and registered 400,000 titles in a single year.
For each status of land to be formalized, the duration of the titling process decreased radically in relation to historical (20 to 30 years) processes: i) 45 days to title in public and peasants’ community land; ii) 60 days in risky zones and mining-claimed land; iii) 60 to 120 days in archeological zones; iv) 150 days in private-owned land.
Impact of the PPR reforms
The PPR project had a large and visible effect on the country and the conditions of the poor. Although political changes in government reoriented the project during its last year, the impact expected was attained:
- 17 percent of households invested in home improvements the year following titling, housing quality improved overall (with more titled homes made of durable materials) and access to services rose (notably water). Crowding was reduced as households increased the number of rooms which also stimulated the rental market. Families had increased their access to basic infrastructure and credit for materials, construction and small businesses, which greatly boosted local development .
- Personal loans for COFOPRI’s new owners increased by 73 percent during that same period.
- Repayment rate of COFOPRI beneficiaries has been better than the total Peruvian market averages .
- The number of mortgages on COFOPRI’s formalized properties grew by 83 percent between November 2001 and November 2005 .
- The markets dedicated to land, housing and finance grew. Property values increased 25 percent of their market value after COFOPRI titling. For the some 550,000 households titled by COFOPRI, the accounted creation of wealth was more than US$500 million .
- 6,000 small businesses were beneficiaries of the property formalization program.
- There were marked changes toward gender equality — 56 percent of titles have been granted to women, and their participation in the economic sector increased and familial inheritance was improved.
- There was an increased participation of family members in the workforce, since beneficiaries had no need to guard the property or spend time doing administrative tasks to obtain a title: there was an increase of 17 percent in the amount of hours worked, a 47 percent reduction in the probability of working inside the home and a 28 percent reduction in the probability of sending the children to work .
- Promotion of credit and registration cultures.
- Titling and registration institutions united under a System of Land Administration developed and operated under a unified digital mapping system.
- The municipal economy was developed, given that their main source of income is the property tax.
- Increased accountability of the state. Corruption decreased due to COFOPRI’s more transparent practices.
In Latin America, around 20 countries see the access to property rights as an important government priority. Peru is a successful example to look at when designing efficient regulations, systems, procedures and implementing programs serving families by bettering their housing situation.
There is no single path for reforms. New reforms will rely basically on the national context, the commitment of the political power, the nature of the tenure situation, and financial and technical resources. However, there are key ingredients for success and impact:
- Identify land tenure types
- Study the processes (know the steps, barriers, costs, individuals and institutions involved)
- Identify the gender gaps
- Simplify the procedures
- Dialogue with all sectors
- Grassroots volunteer engagement and capacity building for surveys, use of GPS, project teams
- Formal political willpower (indicated by laws, funds, or the creation or strengthening of institutions)
- Simple low-cost technologies to support titling and registering systems
To promote security of tenure and access to land rights for the poorest populations is an obvious and important step to facilitate the attainment of the Millennium Declaration. Access to land rights is a worldwide consensus that can and will galvanize support from all sectors of society as well as international donors.
Maria Luisa Zanelli is the program coordinator for the Caribbean in HFH LA/C.
 UN-HABITAT Global Campaign on Secure Tenure, 2006; the Millennium Development Goals for target year 2015.
 The program targeted the largest informal areas in Lima and other cities of the country where dwellers were mostly migrants or third or fourth generation of original migrants. They were among the poor and very poor in society, generally involved in informal services activities. The monthly per capita expenses of the target families in 1997 were around US$49 (World Bank Project Evaluation document, 1998).
 Alberto Fujimori was elected in July 1995 for a second term of government.
 Registro Predial Urbano, Urban Real Eastate Registry.
 Hernando de Soto, President of ILD, signed a technical agreement with the government at that time to draft the legal framework for the creation of the RP.
 During Fujimori’s first government (1990–1995), De Soto was one of his principal economic advisors. With the help of a Japanese-financed World Bank grant, a pilot project applied reforms on property registry in selected urban and rural areas in 1992–1994; later on the ILD and the government distanced from each other.
 “Ley de Promoción del Acceso a la Propiedad Informal” (Decree Law 803).
 COFOPRI is the acronym of Comisión de Formalización de la Propiedad, Commission for the Formalization of Informal Properties.
 Popular neighborhoods are housing association and cooperatives that privately own land bought from the state, but individual properties are not titled.
 Typically, human settlements are formed from the invasion of public lands.
 “Their (the informal dwellers) only alternative is to live and work outside the official law, using their own informally binding arrangements…result from the official legal system, ad-hoc improvisations, and customs brought from their places of origin or locally devised…held together by a social contract, upheld by the community as a whole and enforced by the authorities elected by the community.” From “The Mystery of Capital” by De Soto.
 From “The Urban Poor in Latin America,” the chapter entitled “Keeping a Roof over One’s Head: Improving Access to Safe and Decent Shelter,” by Marianne Fay and Caterina Ruggeri, “Directions in Development” World Bank Publication, 2005.
 From “Secure Tenure in Latin America and the Caribbean,” S. Angel, 2006.