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Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters

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  • Ignacio Navarro
  • Geoffrey Turnbull

Abstract

Formal title to property allows owners to borrow for investing in improvements. Title legalization laws, however, appear to yield only modest increases in housing quality in developing countries. We offer a simple model in which squatters initially balance initial investment in low quality structures to reduce the risk of eviction against the future effect of increasing the marginal cost of improving quality. The effort to secure initial possession thereby creates a legacy effect, reducing subsequent investments in housing quality. Empirical tests using Bolivian data yield results consistent with the legacy theory: initial title risk suppresses long run housing quality. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Ignacio Navarro & Geoffrey Turnbull, 2014. "Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters," The Journal of Real Estate Finance and Economics, Springer, vol. 49(1), pages 1-22, July.
    • Handle: RePEc:kap:jrefec:v:49:y:2014:i:1:p:1-22
    DOI: 10.1007/s11146-013-9417-0
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    References listed on IDEAS

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    1. Rahmat Aris Pratomo & D. Ary A. Samsura & Erwin van der Krabben, 2020. "Transformation of Local People’s Property Rights Induced by New Town Development (Case Studies in Peri-Urban Areas in Indonesia)," Land, MDPI, vol. 9(7), pages 1-24, July.

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    More about this item

    Keywords

    Squatting; Property rights; Property title; Housing quality; K11; R14; R21;
    All these keywords.

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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