Transcript international best practices in property registration

Towards a Title
Registration System in
Delhi: Why and How?
Carol S. Rabenhorst
The Urban Institute
Washington, DC
World Bank Conference:
Challenges for Land Policy and Administration
February 14-15, 2008, Washington, D.C.
Introduction to Delhi
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Population: 14 million (3rd largest in India)
Size: 1483 sq km
Government authority and characteristics:
– Not a state but the National Capital Territory
(similar to Washington, DC)
– Governed by 3 municipal corporations
– Land and property issued managed by Delhi
Development Authority (est. 1957)
– 9 districts and 27 sub-districts for document
registration, including deeds
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Current Tenure Characteristics
in Delhi
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Freehold land (Old Delhi; pre-1947 titles; more recent
colonies; leasehold conversions)
Leasehold land (owned by development authorities)
Apartment – sale deed and use rights; chain of title
remains with developer
Informal settlements – 10m+ people, over 70%
– Types: squatters, relocation settlements, unauthorized
colonies, rural and urban villages
– All income levels
– No title requested or obtained
– No building permit requested or obtained
– Risk of demolition
– Nature of tenure constrains water and electricity supply and
service
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Current Land Administration
System in Delhi
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Registration of sale deed and leases compulsory but often ignored
No central registry for private urban land
Records of government-owned land kept by many separate
agencies
Most land not surveyed
Deed registration system, in effect since 1908
– Registers transactions and transfers (except inheritance)
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Sale by power of attorney allows sales without registration,
incentives to avoid fees and taxes
Records maintained manually by date of registration, not by
owner or property ID; difficult to trace chain of ownership (newer
registration are computerized in most districts)
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Requirements for Deed or
Lease Registration in Delhi
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Document required to be registered (in duplicate)
Two Passport size photographs of both parties.
Two witnesses.
Proof of identification of each party and witnesses i.e. election Identity
Card, Passport, identity Card issued by Govt. of India, Semi govt. and
Autonomous bodies or identification by a Gazetted officer.
In case the property is/was under a lease from D.D.A., L&DO, M.C.D.,
Industries Department, Labour Department of Delhi Govt. etc.,
permission of lessor for registration of the document.
No objection Certificate under section 8 of Delhi Land (Restriction and
Transfer) Act, 1972 from Tehsildar of the Sub Division of the District to
the effect that the property is not under acquisition.
Income Tax clearance Certificate in prescribed proforma 34A, under
section 230 of Income Tax Act, from concerned Income Tax Officer
where the transaction exceeds Rs.5,00,000/Permission from the Appropriate Authority in the prescribed proforma
37 I, where the transaction exceeds Rs.50,00,000/- under the
provisions contained in section 269 of Income Tax Act, 1961.
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Cost to Transfer Title as a Percentage of
Value of Property
Source: UN High Commission on Legal Empowerment of the Poor, September
2005
37.1
6.7 6.8
5 5.1 5.6 5.7
7.3
39.4
15.3
14.1
11.7
10.210.3
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2.5 2.7
2 2.5
0 0.2 0.9
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Consequences of Current
Registration System in Delhi
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Title and possessory rights cannot easily be verified
The property market is inefficient
Property disputes are common
Non-registration and undervaluation decreases government
revenues from stamp duties (5%), transfer tax (3%) and
property taxes
No coordination between authorities
Most households have no access to formal housing finance
– Mortgages made by deposit of title deed with lender, often not
registered → increased credit risk
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Financial sector growth is lagging
– China (pop. 1.3B) : $356b in mortgage debt (from $0 in 9 years) ;
11% of GDP
– India (pop 1.1B): $18b mortgage debt, ≤2% GDP
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Private credit as a share of GDP
Source: Doing Business Database (2004) World Bank
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Recommendations for Delhi
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Change to title registration system
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May require amendments or eventually a new law
Examples of recent changeover:
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Hong Kong – beginning 2004
Ghana – beginning 2003
Scotland – beginning 1979
Reorganize institutional structure under Government of Delhi
Undertake cadastral survey and first registration
Guarantee of accuracy
Open to public
Computerize old records
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Models in India:
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Bhoomi project in Karnataka (WB)
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20M rural records computerized 1995-2001; urban records now underway
Time to register 45 → 6 days.
Maharashtra
Chandigarh
Lower registration fees
Consider other options to improve tenure, at least in short run
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Principles of Title Registration
Systems to be Adopted
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Interests transfer upon registration
Except for statutory reservations, no validity without
registration even with notice
Priority determined by time of registration Government
operated, financed with fees and government funding
Establish guarantee by state
Require information sufficient to identify property and
other interests, establish chain of title
Public access
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Roadmap for Registration
Reform
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Assess the legal and institutional environment
Prepare functional specifications for agency
Design procedures for systematic or first
registration
Fine tune the legal framework
Design efficient registration procedures
Procure survey and mapping information
Assign unique parcel identifiers
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Roadmap for Registration
Reform, cont.
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Procure information systems
Install system architecture and equipment
Implement public information program
Purchase and upgrade office facilities
Train personnel
Plan for maintenance and upgrading
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Cost and Time Commitment
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Range of cost: $8 million to $195 million
Average cost $15-20 million
Time: 5 – 10 years, sometimes 20-25
Average allocation of costs:
Land registration and titlting (incl.
data conversion)
7%
5%
Cadastre services contracts
(aerial photography, mapping,
surveying)
Equipment, vehicles, furniture
7%
33%
Civil Works
8%
Technical Advisors
Policy development and project
management
15%
Training and education
25%
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Cost Recovery and Fiscal
Benefits
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Proven increase in revenues
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Transfer taxes
Property taxes
Stamp duties
Capital gains taxes
Costs not recovered for first registration
Willingness to register and pay fees based on
perceived value and credibility of the system
Relation of lower costs to higher revenues
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Cutting duties increases revenue: example
of Maharashtra, India
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Summary of Findings
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Re-engineering a titling system takes a long time
and a lot of money
A good titling system is required for achieving:
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Best value from land
A robust real estate market
An efficient mortgage market with improved access to credit
Increased investment in housing and small businesses
Keys to success:
– Getting the institutional issues right
– Maintaining political commitment to policy reform
– Keeping the system as simple and efficient as possible
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Results
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Government of Delhi is currently
considering recommendations for legal
and institutional reform, including
change to title registration
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