LAUSR

Despite the presumed negative relationship between formal land titles i.e. Land Title Quality (LTQ) and transaction uncertainty i.e. Transaction Failure Risk (TFR), empirical evidence on the same and on TFR’s most vulnerable groups in developing countries is lacking. This paper bridges that gap based on survey data on 1514 owners of incremental housing from Kinondoni Municipality, Dar es Salaam, Tanzania. The analysis is based on binomial logistic regression models which were implemented to predict both credibility- and title-induced TFRs at the time of purchase. The findings suggest that vulnerable groups to TFR include female-headed households and older people who transact informally, purchasers of properties in well developed but periphery areas, those lacking stronger social connections to support their purchase decisions in both formal and informal areas and distant purchasers (from their respective residency at the time of purchase) buying informally. Furthermore, it is noted that as long as the majority property purchasers perceive a relatively higher title than credibility-induced TFR at purchase, transaction deterrence is mostly attributed to informality in land titles rather than the presence of unscrupulous informal real estate agents or untrustworthy property sellers. Formalisation of land titles in the municipality may therefore benefit property market participants i.e. by reducing perceived TFR only if the majority of property holders have or use title to facilitate transactions. Massive formalisation of properties through systematic adjudication is therefore favoured than sporadic adjudication of land rights for a healthy property market.