The ethnographical interpretivist study analyses how informal development is planned and regulated by customary land management systems (CLMS) and the collaboration between the customary regulation of informal development and urban planning of informal settlements in Cape Town. The combination of zoning bylaws and CLMS creates a legal grey zone in the townships. The CLMS has polycentric authority structures and a hybridity of regulatory practices. It delegitimises zoning bylaws, but it also creates a new role for urban planning away from traditional technical management by specialists to a more pragmatic and selective enforcement of zoning by lower-level municipal officials based on common law and substantial relations tests, in close collaboration with local councillors, the police and public representatives linked to CLMS. Although this is by no means without its challenges, such as the disregard of building lines, waste removal challenges and illegal electricity connections, it does, however, strengthen the role of the state as a final and objective authority and benevolent provider of services. Informal settlements, thus have the best of both worlds: a formally planned substructure and an informalised top-structure that provides citizenship and agency to the subaltern.