NCPA - National Center for Policy Analysis

Securing Property Rights In Peru

December 9, 1995

An innovative program in Peru is attempting to meet that country's need for land titles through a private system of title registry.

Securing titles to property is an urgent issue in developing countries, where more than four-fifths of the countryside has no legally recognized owner. Without proof of ownership, land is difficult to buy or sell, it cannot be used as collateral for loans, its presumptive owners are less likely to build improvements and utilities don't know who to charge for services.

An example is Mexico City, where two-thirds of the residents have no proper deeds. The private companies managing the water system estimate 25 percent of their potential revenues are lost due to the difficulty of identifying and charging property owners.

In Peru, the processing of getting a deed from the bureaucracy formerly involved 207 steps divided among 48 government offices, took an average of 43 months to complete and was too expensive for small landholders.

Three years ago, the Institute for Liberty and Democracy in Lima began to build a computerized registry of land and commercial property as an alternative to the government system.

  • The institute's system is faster than the government's, costs a fraction as much and is designed to be used by mortgage lenders and utility companies.
  • Properties that have been given deeds have doubled in value during the registry's operation due to easier appraisals and reduced risks for creditors.
  • The registry is expanding commercially, with backing from European firms, which foresee power companies and mortgage lenders offering titling services in other developing countries.

Over the past 30 years, international agencies have given several hundred million dollars to third-world governments to develop their property title systems. The World Bank admits that nearly all its rural titling programs have achieved poor results, producing satellite maps and databases but not many useful registries.

Source: "A Matter of Title," Economist, December 9, 1995.

 

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