Chapter 8. Land registration and information systems

8.1 Land registration systems
8.2 Land information systems
8.3 Case-studies

8.1 Land registration systems

As populations gradually grew in most societies, land became an increasingly scarce resource and various types of rights to use the land developed. Traditionally, land transfers became a legally binding agreement upon the delivery of the transfer price or an oral agreement. However, it became increasingly necessary to develop systems which would clarify ownerships and minimize disputes. The three major land registration systems which developed are the deeds registration system, the title registration system and the private conveyance system.

In the deeds registration system, the transfer document (the deed) itself is registered. The deed does not prove the ownership and the chain of ownership has to be traced back either by lawyers or the land registration authority.

In the title registration system the certificate itself is the proof of ownership. This system was developed in the United Kingdom and exists in many Anglo-Saxon countries and countries with such influence. In many countries with this system, the land registration system is not complete either because it is not compulsory to register transfers or because it is only necessary to register when land is sold or subject to long lease (e.g. England and Wales). The Torrens system is a variant of the title registration system developed in Australia. The advantage is that there are two certificates to each parcel and the original is kept at the land registry. An ownership transfer is merely endorsed on the back of both the original and duplicate. Variations of this system have been adopted in countries such as Thailand, Malaysia and Kenya.

The private conveyance system is the most common system in developing countries. It is based on the system to register deeds. However, only about 10 to 20 per cent of transactions are registered for example in Bangladesh and Pakistan with the remaining transactions conveyed either formally or informally with or without a person of legal training involved (Farvacque and McAuslan, 1992). A practice has gradually developed in most societies whereby the land transaction should be written and that there should be a witness.

The process of registering deeds is often very time-consuming in developing countries. In West Java, land transfers take an average of 32.5 months for title issuance (Struyk, Hoffman and Katsura, 1990). The importance of a functioning land registration system in developing countries have been described by Doebele (1985):

"Urban land is among the most valuable economic and social resources of any nation, and it cannot be properly managed without an adequate system for the measurement and recording of the boundaries of parcels, and the registration of all legal rights related to each parcel, that is to say, without an adequate cadastral system. At a time when land is becoming an increasingly difficult element in virtually every development project, the lack of cadastral information has become ever more critical. However, it is precisely in those countries in which the rate of urbanization in the next two decades is expected to be most rapid that the cadastral systems tend to be weakest. The establishment of such systems is therefore now becoming regarded as much a part of basic infrastructure as roads and electric grids: an essential element to expedite virtually all other forms of development ..... 50 per cent of all World Bank urban projects between 1972 and 1982 have encountered additional costs and/or substantial delays due to inadequate cadastral and property tax systems."

The importance which the market attaches to land registration in some countries is indicated by research in some rural areas in Thailand. The market value of untitled land of the same quality is between 40-80 per cent of the land value of titled land (Chalamwong and Feder, 1988).

What are then the benefits of a juridical cadastre (land registration system)? The juridical cadastre normally consists of two parts: The first part is a written record or register with information on each parcel, such as owner and the rights of the land, while the second part includes a detailed description of the parcel in the form of a map or survey measurements. The second part is normally cross-referenced with the first (Dale and McLaughlin, 1988). When the records and descriptions are combined, then the land registration system should provide the following major benefits:

• Security of ownership and tenure rights. This is the most important impact. It reduces the amount of land disputes which currently is a major issue in developing countries. The security of ownership also stimulates land development;
• More efficient land transfers. The costs of delays for permits is a serious constraint in most developing countries, and an efficient registration system makes transfers easier, less expensive and more secure;
• Security of credit. The land title can be used as collateral for loans. This security has a positive impact on the productivity of the land since it enables the release of major financial resources for investment in the land;
• Public control of land markets and intervention. Policies such as land redistribution and control over foreign land ownership are difficult to implement without a functioning land registration system;
• Support for the land taxation system. The expenses for improving the cadastral system would, in actual fact, quickly be covered by increased property tax revenues;
• Improved land use and management. It can directly provide better information on land ownership and rights for physical planning as well as facilitate the development of other planning tools such as information banks covering land use, land values, population etc. It can also provide a tool to restrict certain land uses with a negative environmental impact;
• A land registration system based on parcels could lead to a more advanced land information system (see below).

  The problems which governments are facing in developing countries can be divided into four categories: institutional, technical, economical and lack of motivation. The institutional problems include shortage of skilled staff and lack of interorganizational and interdepartmental coordination. Technical problems include the inefficiency and inflexibility of the existing system and the high standards regulated for surveys. Financial problems are incurred through high costs for subsidizing the system. It has been proven in many countries that the costs for improving the registration system can be recovered within a very short time span with revenues from land transfers (for example Thailand) and/or property taxes (Farvacque and McAuslan, 1992). The motivation problem often stems from the fact that registration of such a scarce and valuable commodity such as land is a politically sensitive matter.

  It has been recommended that developing countries should use progressive systems. This means that when a new cadastral/land registration system is introduced, or an old improved, its design should be such that, although technically simple, it can be upgraded easily and readily adaptable. Larsson (1991) suggests different types of simplifications which are available in a progressive system:

  • Reduction of functions;
  • Establish the cadastre on a higher scale initially such as, for example, the block or ward unit. This would not include registration of each parcel or owner;
  • Use simpler methods of delimitation and demarcation. There exists even an example of a successful system where dwellings were identified on aerial photos;
  • Reduce standards of accuracy for land registration surveys;
  • Minimize field work. Use existing maps and records as much as possible;
  • Establish provisional registers;
  • Selectivity. Selection of land units can be based either on registration of individual landowners or an area. The system may or may not include compulsory registration.

  However, before setting up a progressive system it is necessary to assess the existing system and define the objectives for improvement. It is very often necessary to improve the institutional arrangements and strengthen the technical skills of staff. It may also be worthwhile to consider introducing some incentives for individuals to register their land. The incentives may include, for example, inexpensive registration fees, introduction of grace periods from property taxation and legal assistance to low-income groups. It could also be desirable if the national control boards for banks provided stricter rules so that a mortgage could only be provided for land which is officially registered.

  In this study there has been an extensive discussion of the responsibilities of the national, regional and municipal governments. The land registration system is normally the responsibility of the national or regional governments. The major arguments for this approach is that the land registration system normally is very cost-intensive and that there are major cost savings to be gained by operating on a larger scale. However, certain issues such as data collection and data/record management could be decentralized. Among the case-studies, Bandung and Makati have national government systems, Penang regional (state) and, in Dhaka, the responsibilities are shared between the national and the state government.

  8.2 Land information systems

  Historically, governments have established records (cadastres) for fiscal and legal purposes. The systems have been based on either ownership, parcel (plot) or a series of plots with the same owner (landholding). These records have been established and kept separately. In this increasingly complex society with an abundance of data and information, there are many reasons for developing a system to attain and combine information on land in a systematic, rational and efficient manner. There are now considerable efforts being made in many countries around the world to create land information systems with data from different sources based on a cadastre where each parcel has a unique identifier. Figure 8.1 describes the concept of a land information system where different agencies build a series of overlapping maps or other media of information based on common identifiers.

  Land information management is an integral part of urban development and urban management. The actions which are required in order to improve the land information system may vary depending on the city and country context but there will always be a basic need for cooperation between different government agencies. Box 8.1 on Singapore's land data hub provides an example of several agencies cooperating.

  Box 8.1. Singapore's land data hub In Singapore, twelve government agencies have cooperated in integrating land-related data in digital form with financial assistance from UNDP and UNCHS. The Land Data Hub contains information (statistics, descriptions, maps etc) on cadastral boundaries, building outlines, and topographic data as well as sewerage, drainage and telephone networks. Substantial cost savings have been made by avoiding work duplication and data inconsistencies. Standardized data can now easily be integrated with local data kept by each agency. Singapore Telecom, for example, can extract 70 per cent of the data for its base map from the hub. Various agencies are responsible for the continuous supply and updating of data to a support unit located in a central ministry which is supposed to harmonize the data. The agencies meet regularly to agree on common policies and procedures. It was possible to import 50 per cent of the data from the agencies included in the hub. The hub was being used within three year from the time the project was initialized. Source: Paulsson (1992)

  The need for efficient land management systems in developing countries are evident. However, the costs for technical equipment and skilled staff are still very high. Each country and city will have to assess their situation and reach a decision on what is affordable. It is highly recommended to consider a progressive land registration system which will enable future expansion as the equipment and technology will eventually become more accessible for budgets which are tighter as well.

  Figure 8.1. The concept of a land information system

  

  Source: Adapted from Dale and McLaughlin (1988)

  8.3 Case-studies

  As mentioned before, the municipalities have very little responsibility for land registration. In Dhaka, for example, the municipality is only responsible for the issuance of holding numbers (identity of households); and in Makati, the transfer tax should be paid to the Municipal Treasurer. However, the quality of the land registry is of great importance for the municipalities since they are or could be prime users of the data. The information from a land registry could provide assistance in planning, property taxation, production of cartographic material, monitoring land use and environmental impact etc.

  In terms of revenues from land registration and transfer, Dhaka received US$0.8 million from the transfer tax in 1993-1994. Makati and Penang, on the other hand, do not receive revenues from land registration or transfer.

  Bandung estimated that 50 per cent of the land in its municipality is not registered. It is not compulsory to register land ownership or land transfers. In actual fact, documents on ownership from the property tax registry, which is also a national government responsibility and kept separately from the land registry, is regarded as the necessary proof of ownership. In order to improve the system, a programme to survey all land and to provide public information has been initiated in Bandung.

  Applying for land registration in Bandung is also very time-consuming as the national land registry is inefficient. City officials estimated that only about 25 per cent of applications for land registration are approved within two years.

  In Bangladesh, the stamp duty was 12 per cent and the registration fee six per cent of the deed value. The registration fee included a municipal transfer tax of one per cent. There is no system of fines for landowners who do not register their land. The system of deed registration in Bangladesh does not automatically provide proprietory rights to parcels and there are no provisions for financial compensation for errors in deeds. City officials admitted that there has been "large scale fraud and forgery related to land registration".

  Land registration in Viet Nam is carried out on the municipal level and the registration books are kept at the municipal land office. About 1-2 per cent of the land in Hué is unregistered. Hué municipality estimates that 95 per cent of transferred land is registered within two years.

  In Makati, the National Government Register of Deeds is responsible for land registration. The Register of Deeds will require a certificate which proves that property and transfer taxes due on the property have been paid. The Register of Deeds and Public Notaries should provide the Municipal Assessor with copies of all contracts on transfers, leasing and mortgaging concerning the land parcels within 30 days of the date of registration or acknowledgement. The Register of Deeds is also required to provide the Municipal Assessor annually with a brief description of all property included in the Registry of Property.

  Makati has a land transfer tax which is 50 per cent of one per cent of whichever is highest of the transfer value or the fair market value assessed by the Municipal Assessor. Violations are punishable by a fine not less than 1,000 pesos (approximately US$40) and/or at least one month of imprisonment.

  
  
  

  Go to Chapter 9: Property taxation