Exploring the Interface Between Formal and Informal Real Estate Markets in Facilitating Legally Binding Transactions in Zambian Cities

Abstract

Informality is the order of the day in most cities in the Global South. This paper explored the puzzle whereby informal activities result in legally binding real estate transactions in the city of Kitwe in Zambia. The paper conceptualises the “market” from an institutional economics perspective as a system to coordinate human activities and not merely as the interaction of supply and demand. Using evidence from Chimwemwe, a formal municipal township in the city of Kitwe, and a questionnaire survey amongst registered and unregistered real estate agents, the study found that most “market transactions” in low-cost formal settlements are facilitated through social networks of friends, relatives, and neighbours and through informal agents, and minimally through formal agents. These transactions are then legally registered at the Council Deeds Registry for legal transfer. Despite the existence of the Estate Agents Act of 2000, and the establishment of the Zambia Institute of Estate Agents (ZIEA), the study found that most informal agents have problems complying with the registration provision, thus leaving them to operate illegally. Nonetheless, these informal agents provide a service in low-income settlements through procedures which mirror formal ones, resulting in legally recognised and binding transactions and at cost commensurate to the incomes of their clients. However, the negative traits exhibited by some informal agents cannot be overlooked, thus it is necessary to re-examine the law to understand what is preventing informal agents from complying with this provision on registration.