Fit-for-Purpose, Private-Sector Led Land Regularization and Financing of Informal Settlements in Brazil

Malcolm Childress,Edgard Barki,Selina Carter

doi:10.3390/land10080797

Abstract

This paper aims to analyze the financial and operational approach to land regularization and financing used in Brazil by an innovative private social enterprise in order to demonstrate that the approach widens the concept fit-for-purpose land regularization to include fit-for-purpose land financing, with relevance for wider efforts in informal settlement regularization and upgrading. In this approach, the enterprise acts as a coordinator and broker to organize the residents of informal settlements to regularize their settlements by negotiating buyouts of the underlying private owners at discounted values, handling titling and registration of the occupants, and coordinating with municipal governments to provide infrastructure. The analysis of parcel-level repayment and price data provides evidence of the sustainability of the business model and increase of property values of the regularized parcels. The results presented from the enterprise’s own repayment data demonstrate that under (non-pandemic) historical conditions residents are largely able to pay an affordable monthly payment over 7–10 years to the enterprise for the service to purchase the plots and maintain the enterprise. In operation since 2001, the enterprise has regularized over 20,000 parcels in more than 30 settlements, primarily in the cities of Sao Paolo and Curitiba in Brazil. The approach suggests that it could be widely replicable and add to the set of options for regularizing informal settlements, especially when purchase of private land is required.

Highlights

This paper aims to analyze the financial and operational approach to land regularization and financing used in Brazil by an innovative private social enterprise called Terra
This review identifies the need for a broader set of approaches to informal settlement regularization given the continued proliferation of this type of settlement globally
The relevance of the case is high in Brazil, where most informal settlements are located on land with an underlying private landowner who must be compensated in order to relinquish rights to the occupants

Summary

Introduction

In order to demonstrate that the approach widens the concept fit-for-purpose land regularization to include fit-for-purpose land financing. The feasibility of the approach has relevance for wider efforts in informal settlement regularization and upgrading. The paper reviews the literature on informal settlement expansion and regularization. This review identifies the need for a broader set of approaches to informal settlement regularization given the continued proliferation of this type of settlement globally. The review identifies financing for land and housing as a barrier which prevents regularization of informal settlements on a wider scale and impedes the linkage between informal and formal systems for urban services. Multiple observers have hypothesized that improved land financing is a key to resolving the challenge of informal settlement regularization. Land financing for poor populations is challenging because of low and inconsistent incomes, and requires specific fit-for-purpose arrangements which traditional financing institutions have been reluctant to provide

Objectives

Methods

Results

Discussion

Conclusion