Housing Affordability: The Land Use Regulation link to Informal Tenure in Developing Countries
Cynthia Goytia & Ricardo Pasquini
This paper provides empirical evidence on the causal association between land use regulation and housing affordability in cities from Latin America, where informal residential tenure condition of households is widespread. We collected a nationwide survey of local land use regulation from planning professionals in Argentina?s municipalities comprised in the big urban metropolitan areas, and filling the gap of the lack of a source of comparable and systematic knowledge on the topic. A set of land use indicators are then created allowing the analysis of the regulatory environment according to some of the main issues (e.g., existence of land use plans; authorities involved in zoning changes and residential projects approval processes; existence of building restrictions, infrastructure provision, the presence of access to land regulatory elements, and the cost related to project approvals). Then, using data from the National Households Survey and the National Census, we estimate the effect of land regulation on households? formal/informal tenure condition. Between other findings, we document that those municipalities that have incorporated more land planning regulatory measures into their legal and regulatory frameworks also face the cost of larger informal land sectors. We also find negative effects on formality for higher residential approval costs, tighter regulation (in the form of more authorities involved in housing projects approvals), and positive effects on formal tenure housing driven by the existence of inclusionary policies.
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