The benefits of informal housing

There is an assumption on the part of urban central planners that informal housing projects are static slums. This is not true.

Part of the problem with informal housing is the lack of secure, tradable property rights when a dwelling, however scant, is built the owner is reluctant to improve it.  Any improvements, and the entire dwelling could be taken from the builder at a later date. Where property rights are allowed housing stock evolves as owners continually improve or upgrade their residences.

Surplus government land should be allocated for settlement with sufficient plot sizes to minimize health hazards and fire danger. In addition the new owners of the property should have absolute security of title and full tradability to sell the land if they wish. Such plots should be allocated whether or not a dwelling there meets current government standards. A homeless person with a plot can build a house, but a homeless person without a plot can do nothing.

The poor in the world are capable of housing themselves. This is shown by the fact that most poor people do exactly that. Very few of the world’s poor are housed by others. The book Freedom to Build makes just this point, it says “a third of the world’s people house themselves with their own hands, sometimes in the absence of government and professional intervention, sometimes in spite of it.”

The abilities of the poor are not just underestimated but stifled by regulations and the lack of land. Again, this is why I advocate the distribution of suitable plots with or without services. If the land is secure and tradable the owners will invest in housing. Over time housing will evolve and become more and more valuable. As value is created homeowners will begin building infrastructure when density and wealth levels allow for it.

Hernando de Soto’s investigation of informal housing in Peru found exactly the same phenomenon. The threat of eviction reduces investment in the building itself because it is basically unmovable. Instead, “informals tend to invest in such items as household electrical appliances and vehicles, which are movable, rather than in such fixed items as piping, drainage, or roofing. It is not unusual to find motor cars, televisions, and other appliances in informal settlements with shoddy buildings. It is hardly surprising, therefore, that no investments are made in sanitation, with serious consequences for everyone’s welfare.”

The incentives of ownership change human behaviour. Public spaces, which are in essence owned by no one, are treated with disrespect while individuals are far more careful with their own property. Housing that is securely owned will be better maintained and upgraded over time. Even Colin Ward, a man of the Left, recognizes this: “The owner-occupier cherishes and improves his home, although its space standards and structural quality may be lower than that of the prize-winning piece of municipal architecture whose tenant displays little pride or pleasure in his home. The municipal tenant is trapped in a syndrome of dependence and resentment, which is an accurate reflection of his housing syndrome. People care about what is theirs, what they can modify, alter, adapt to changing needs and improve for themselves. They must be able to attack their environment to make it truly their own. They must have direct responsibility for it.”

Ward has touched on an important aspect of private ownership — the psychological benefits private property has on the owners. Author John Turner notes the owners of informal housing have three distinct advantages over those who are housed by the state. First, he says, they have the freedom of self-selection regarding in which community they will live. Secondly, they have the freedom to budget their own resources. And finally they have the freedom to shape their own environment. Instead of feeling powerless the poor, who are given the freedom to house themselves, feel a greater degree of empowerment — perhaps for the very first time in their lives.

These psychological benefits to the economic benefits of ownership and the ability to create a community renaissance is a real possibility. If there is ever to be an African Renaissance then there must first be a Renaissance in each individual community. Extending the benefits of private property to the poor, and giving them the freedom to develop that property and reap the profits, is one means to jumpstart that Renaissance.

James Peron is the president of the Moorfield Storey Institute and author of several books including Exploding Population Myths and The Liberal Tide. The views expressed in this article are those of the authors and not necessarily those of the Free Market Foundation.

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