Does Honduras need a new cadaster and real estate law?

One of the underlying conflicts in the recent political crisis was decree 18-2008 from the national Congress in Honduras, which contained the expropriation of some 40,000 hectares in the country. This caused land to be seen as worthless for banks, and thus credits to the important agricultural sector dried up.

A specific situation developed in lower Aguán, with the occupation of land, and even murders. That conflict has now reached the president himself, who is trying to resolve it in a peaceful way that respects landownership, but also the need for the traditional farmers to have land to cultivate.

The structural problem behind this seems to be the lack of a cadaster, and an appropriate law on landownership in Honduras. On August 8th I proposed on this blog that a land lease law would be beneficial – and definitely better than to expropriate land that is not being cultivated.

Expropriation destroys the value of real estate, which is the fundamental source of security for loans. The result is high interest rates, low investments, low development, and perpetuated poverty in Honduras.

In contrast, leasing land allows all land to be used in the most productive way regardless of who owns it, while at the same time providing a security for the loans. It increases the value of the land, and can be used as a lever to lift the country out of poverty, and even into the modern so-called developed world, if combined with other measures, such as fighting crime and improving education.

It is generally recognized that having a cadaster is essential for a country to develop. It is the foundation of the economy. After the collapse of the Soviet Union, Sweden assisted some of the former soviet republics with developing a new cadaster (since their old ones had been destroyed). Understanding the importance of this, Russia on its own decided to also implement its version of the Swedish cadaster (which is the oldest one in the world, and has been named the best, followed by the German). Although I haven’t seen any study on this, from the observations I have there seems to be a clear correlation between GDP and the existence of a cadaster.

It thus seems a no-brainer that the Honduran Congress should develop a new legislation that covers a modern cadaster, real estate ownership, and real estate lease.