An Introduction to End-to-End Services and Cost Recovery for Property Registration

Scarce land and property documentation plagues the developing world: over 1 billion people have insecure property rights. The inability to demonstrate secure property rights, particularly among low-income households, remains the core of the world’s most pressing challenges: conflict, gender-based violence, hunger, poverty, and vulnerability to disaster. Put another way, secure property rights—both formal and informal—are a foundational asset upon which livelihoods and stability are built.

The Future of Land and Housing Program at New America, in collaboration with Suyo, a social enterprise that provides tech-enabled land rights services to low-income households in Colombia, has produced a series of briefs to explore innovative approaches for demand-driven property registration.[1] This is the first brief in the three-part series. It highlights long-standing problems with delivery of property documents across the developing world, and introduces end-to-end service and cost-recovery business models as innovative approaches for more sustainable and accessible registration efforts. We conclude with a short case study on Suyo’s work to demonstrate how these concepts work in practice.

Globally, Property Registration is a Service Delivery Failure

The lack of property documents negatively affects low-income households in developing countries. Families that do not securely own their land are less incentivized to make investments that boost economic productivity, property value, and the structural integrity of housing. As a result, informal landowners have lower incomes, often cannot access credit or markets, are food insecure, and lack resilience to natural disasters and other extreme weather events. These insecure property rights also contribute to familial infighting, gender-based violence, and community conflict. Trapped in cyclical poverty—sometimes for generations—low-income households struggle to improve their quality of life on multiple levels. Insecure property rights are a particular challenge for women: 40 percent of countries limit women’s property rights in some way; women do not have equal ownership rights to property in 19 countries; and men and women do not have equal inheritance rights in 44 countries.

Insecure land tenure is in large part due to ineffective land governance at the national and local levels. This usually includes the government’s inability or unwillingness to map and title large areas of a country; the lack of good-faith stakeholders to effectively shepherd property owners through long and tedious registration services; and exorbitant costs associated with land registration. These challenges become even more complex when combined with existing hardships in poverty-stricken communities, or within fragile states impacted by corruption, armed conflict, or ethnic tensions.

Lack of land documents is a social service delivery failure, and one that is not easily solved, especially for extremely poor and marginalized households that cannot navigate opaque and bureaucratic property registration processes. Within any country, land-related agencies at the national, sub-national, and local levels often have overlapping roles and responsibilities, while the involvement of private and/or international stakeholders further adds to the daunting and complex challenge of property registration.

Multilateral lenders, such as the World Bank, and bilateral aid agencies, such as United States Agency for International Development (USAID) and Foreign, Commonwealth and Development Office (FCDO), are critical for the supply of land registration services in the developing world, through funding, technical assistance, and direct implementation. But even with billions invested in the past few decades, systematic property registration remains a difficult task, as internationally-backed projects encounter bureaucratic inertia, lack long-term funding to properly scale, or fail to sustainability integrate their services with national land management systems.

Overall, this convoluted environment frustrates and disheartens informal landowners. Many households likely abandon efforts to register their land at some point in the unnavigable process or avoid it altogether. When secure property rights are out of reach for large swaths of a population, individuals, communities, and whole countries miss out on the benefits, including financial inclusion and expanded access to public services, greater gender equality, reduced conflict, and improved natural resource management.

Potential Solutions: End-to-End Services & Cost Recovery

So how can property registration become both simpler for informal landowners and more sustainable for service providers?

Several technical implementers, as well as international donors, are increasingly interested in two interrelated strategies for land registration services within developing countries: providing (1) end-to-end services within a (2) cost-recovery business model.

“End-to-End” Land Registration Services

By some estimates, three-fourths of all parcels globally are not formally registered, suggesting that customer demand for property registration services throughout the developing world is high. Recent experience further suggests that demand is greater when potential customers understand the benefits of registration. Yet some informal landowners have faced incidents of fraud and theft, or opaque and inefficient processes when attempting to register their land, and are now weary of good faith efforts. Indeed, traditional providers, such as independent lawyers and informal middlemen, often fail to supply their promised land registration services.

According to 2019 World Bank data, the average time to register property in sub-Saharan Africa is 52 days, while in Latin America and the Caribbean it is 63 days. It takes a startling 108 days on average to register land in South Asia. By contrast, an individual can register their property in ten days in North America.

Not only that: during such drawn-out registration processes, individuals must complete approximately seven different steps on average across sub-Saharan Africa, Latin America, and South Asia. The process is shockingly worse in many emerging economies. The Brazilian land registration process includes 14 different procedures; it is twelve in Nigeria and nine in India. Imagine the difficulty and opportunity costs that a poor farmer experiences while repeatedly attempting to access land registration services—especially if services are located many miles away.

Innovators in the space are attempting to reduce the time, costs, and many challenges of navigating the bureaucracy of property registration. End-to-end service entails working directly with informal landowners to provide affordable, reliable, and sustained assistance in overcoming the technical and legal obstacles to land registration. Often, this model incorporates a “one-stop shop” suite of services, as many customers’ needs extend beyond registration. Assistance with sales, successions, subdivisions, appraisals, building registration, and code compliance all help to ensure that the benefits of registration are maximized and maintained over the long-term.

End-to-end service entails working directly with informal landowners to provide affordable, reliable, and sustained assistance in overcoming the technical and legal obstacles to land registration.

To ensure that registration services are more accessible to low-income individuals and families, many organizations are exploring the use of technology to reduce costs, as well as innovative partnerships to facilitate communication and customer access to credit.

A “Cost Recovery” Business Model

Grant funding is often insufficient to allow international and local-level development organizations to deliver property registration at scale. Provision of registration services is itself expensive, as long-term assistance to many informal property owners usually requires a significant amount of time and resources.

These operational expenses are combined with bureaucratic fees, taxes, and other transactional costs from dealing with the wide range of stakeholders throughout a country’s land sector. Across sub-Saharan Africa, Latin America, and South Asia, for example, the cost of registration averages nearly seven percent of a property’s value. Many governments in the developing world rely on this revenue for public spending, and are therefore reluctant to lower the price of registration.

By contrast, the average cost of property registration in OECD high-income countries is little more than four percent of land value. New Zealand, Switzerland, and Estonia, all highly-developed countries, charge half a percent or less for registration services. Efficient, transparent, and digitized land management systems, along with very low registration taxes and fees, account for the lower costs.

Service providers such as Suyo, Meridia, Cadasta Foundation, and Terra Nova are consequently assessing or using cost recovery business models. At its most basic, “cost recovery” refers to the ways in which an organization ensures that all expenses incurred during an activity are recouped. Within the land sector, a central premise of cost recovery is to reduce dependency on donor subsidization of land registration. This is often accomplished through basic fee-for-service payments, although success of these initiatives usually depends on two interrelated factors:

• Capacity to Pay (CTP): The maximum amount of debt that a family or individual can assume in order to purchase a product or service. Because customers of land registration services are often low-income, households may have limited ability to pay using cash. Subsidies or flexible financing options may be necessary.
• Willingness to Pay (WTP): The maximum price that a customer is willing to pay for a product or service—in this case, land registration services. WTP varies significantly from customer to customer, and individual willingness can change over time. Effective communication regarding products or services can convince customers to make a purchase.

When faced with a choice between paying for property registration services or more immediate necessities, many consumers prioritize their short-term needs. Partly due to this reason, innovative funding mechanisms must continue to be tested and refined to allow for land registration within the economic constraints of low-income communities.

Innovation in Practice: The Case of Suyo

To better understand the use of “end-to-end” registration services and a “cost recovery” business model within property registration, we examine Suyo, a social enterprise that provides land rights services to low-income households primarily in Colombia.

Suyo developed out of a property registration pilot project in Bolivia in 2012. This pilot tested a unique value proposition within the land sector: leveraging technology to offer sustainable, accessible, and trustworthy property registration services to households living in poverty. Aided by the use of data collection software and mobile devices, Suyo facilitated land registration for seven Indigenous territories, and completed this work three times faster and for 43 percent less cost than other communities registering their land at the same time.

Now working in rural and urban Colombia, Suyo engages directly with low-income families to provide a range of services related to property registration. From launch of operations in 2015 through 2020, the organization has directly provided 3,337 property diagnostics and registration services to 10,945 beneficiaries throughout the country.

A typical customer journey with Suyo proceeds like this:

1. Suyo agents and/or partners first share the benefits of property registration with potential customers.
2. Following this initial contact, Suyo provides a “property diagnostic,” which analyzes the technical, administrative, and legal characteristics of the customer’s property to determine the most viable path for registration. Through a combination of proprietary technology and land expertise, the company collects an average of 160 data points on both the property and the customer, as well as photographs, owners’ and neighbors’ testimonies, and property tax and utility receipts. Suyo then compares and contrasts those data with satellite imagery and datasets from over a dozen government agencies.
3. After the diagnostic, the customer receives a document indicating the current status of their property, the services required to register their property, and a detailed cost breakdown of the recommended property registration service(s).
4. As every property requires a slightly different pathway towards registration, the customer can opt to purchase one of Suyo’s more than 50 legal and technical services from ten different property-related categories. Important interdependencies exist between services, and the potential for the impact of land registration is greatly increased when multiple services are offered sequentially or in parallel. An extensive portfolio of services also helps households maintain formality in the long-term, by enabling them to engage in property transactions and other activities well after initial registration.

Suyo began its operations in Colombia with a “business-to-consumer” (B2C) model, working directly with the customer. Understanding that scaling would be a challenge, Suyo and local partners engaged potential clients on a community basis rather than on an individual basis.

Despite a promising start, Suyo's B2C approach was not scalable for two primary reasons. First, decades of fraud and delivery failure from traditional service providers in Colombia instilled a deep distrust from potential customers in property registration services. These suspicions often fed into community-wide rumors regarding Suyo, prolonging the sales cycle and diverting organizational energy away from advertising service benefits. Second, many interested customers lacked the CTP and were unable to pay out-of-pocket.

Suyo eventually transitioned to a “business-to-business-to-consumer” (B2B2C) approach, through which its private sector partners offer property diagnostic and registration services to their workers as an employee benefit. The majority of these agreements, for example, are made in the floriculture industry, which employs over 130,000 people in rural regions throughout Colombia. The organization's focus remains on low-income households, but this shift in strategy resulted in a significant improvement in customers’ perception of Suyo and their trust in its services. The B2B2C model also created more options for customers to pay for registration services, including payroll deduction loans, employer subsidies, or use of employer benefit funds.

These corporate partners’ participation in the processes was critical for increased uptake of property registration services, as communications on technical and legal information from a trusted intermediary boosted customer interest in Suyo’s services. And help with customer acquisition, financing, and follow-up facilitated client progression from the initial property diagnostic to full registration services. Some employers even utilized their human resources staff to organize events, act as a liaison for communications between customers and Suyo, and help employees gather the necessary documentation to process claims.

The model significantly reduces customer acquisition costs, and Suyo has established more than 60 agreements with private corporations across sectors such as agriculture, manufacturing, and infrastructure. Expansion into other sectors with high registration needs, such as the construction and mining sectors, is a future possibility.

But while a B2B2C business model clearly resulted in greater success for Suyo, it is not a panacea to service delivery issues in the land sector. It should be noted that in order to remain economically viable and scale its operations, Suyo has supplemented its B2B2C registration services with technical consulting and large-scale formalization services with funding from governments and international cooperation contracts.

Learn More

The purpose of this first brief was to outline challenges with property registration services throughout the developing world and introduce a number of innovative models to overcome such challenges. Yet our analysis is far from exhaustive, and many of the ideas outlined above warrant further exploration. As New America continues its briefer series, we will examine two critical questions:

1. What models exist to finance property registration services for low-income households, and is any approach more effective than others? (Access brief #2 here.)
2. How can organizations like Suyo increase uptake for property registration services? (Access brief #3 here.)

Insights to these questions can also be found in Suyo’s recent report, Learning for systems change in property rights formalization.

Contact

Thoughts or questions? Contact Yuliya Panfil (New America) at panfil@newamerica.org.

Endnotes:

[1] Development experts variously, and sometimes interchangeably, use the terms “documentation,” “formalization,” and “registration.” For the purposes of this briefer series, “documentation” refers to basic data collection on property rights and the issuance of some document, whether official or unofficial, based on that data. “Formalization” involves official recognition of rights by national land agencies and/or other government actors. Increasingly, however, customary land rights are being formally recognized, and a gray area exists in the discourse as to whether this is considered “formalization.” For sake of simplicity and inclusivity, we will use the term “registration,” which captures both “documentation” and “formalization,” recognizing that certain services, such as Suyo’s offerings, may be significantly more expensive or difficult to provide precisely because they offer formalization in addition to documentation. Where appropriate we make this distinction.