Informality, squatters and the state : the urban property formalization experience in contemporary Peru

Abstract

This research paper reviews the urban property formalization experience in Peru with particular emphasis on the 1996 - 2004 period. With the creation of specialized institutions under the Plan Nacional de Formalización (PNF), this experience of large scale registration, legalization and administration of informal property has been technically and financially supported by the World Bank and pertinently accompanied by legal modifications of unprecedented dimensions in Peru's republican history. Many world authorities in property rights issues - such as the Peruvian economist Hernando De Soto - have described the multiple benefits that come with property formalization. In this regard, a secure and trustful property rights regime can stand as a key element for governmental policies that provide legal protection to owners, promote transparent market transactions, add economic value to properties and foster public and private investment efforts. "Informality, squatters and the state; the urban property formalization experience in contemporary Peru" intends to describe, explain and answer some basic questions posed by individuals interested in urban property rights in Peru and the developing world. Crucial topics such as an overview of the origins of urban informality, the selection of formalization mechanisms and the social and economic importance of property legalization in squatter settlements will be covered. In support of these aims, quantitative and qualitative data obtained from public and private sources during a three-month fieldwork period conducted in Peru, will be incorporated. On a note of reflexion, it is frequently found that those who strongly support or reject these formalization efforts base their arguments on narrow ideologies or partial analysis of comprehensive experiences. This bias can lead to either an excess of optimism about its benefits or, on the other hand, to non-constructive criticism. However, agreement that informality negatively affects human progress exists, hence the need for Peru and other so-called "underdeveloped" states to plan, implement and evaluate holistic and people-centred development policies.