Land Values, Property Rights, and Home Ownership

This paper examines land values and the associated property tax implications of formal property rights, informal property rights, and squatting. Using data from the Peruvian Living Standards Measurement Survey for 2007 to 2012, the paper provides estimates of the land value and property tax losses associated with squatting. We use a hedonic model to obtain these estimates which are then used to provide the implied value of property taxes that are not being collected due to informal property rights. The policy implications of the results suggest that improved methods for property right assignment that would led to enhanced property tax collections that may lead generate funds for the provision of infrastructure in the affected communities.

Working paper was initially posted on May 17, 2017. Minor edits were made to the paper on February 23, 2018.