The importance of legalization policy in spatial development, planning, and governance: insight from Serbia

Abstract

The paper examines one of the unique urban and spatial challenges of the intensive development of illegally constructed buildings (ICBs), and a key issues of the legalization policies in Serbia during the socialist and post-socialist periods. According to official data, there are 2.1 million ICBs or 43.4% of the total number of buildings in Serbia. Similarly, it is estimated that almost 50% of the buildings in South-Eastern Europe were built illegally. This shows that a significant part of the buildings does not have a legal validity. Since the 1950s, various contextual factors, especially the restrictive spatial and urban planning (or lack of plans), urban land policy and the inability of the socialist framework to provide affordable housing, have implied the emergence of ICBs as a way of meeting housing needs. Therefore, the ex-post legalization of ICBs is one of the ways to ensure the legal validity of ICBs in Serbia. It seems that the exogenous adoption of legalization policies, based on the neoclassical approach and ‘mainstream’ neoliberal approach, without the endogenous decision-making on the emergence of ICBs, as well as reduction of the importance of planning policy, did not contribute to achieving acceptable results. Therefore, in this paper would introduce the framework of ‘credibility thesis’ of specific institutional forms (e.g. ICBs) as an antipode to the neoclassical approach (Ho, 2014). The institutional credibility includes the credibility of property rights within the Formal, Actual and Targeted (FAT) framework. It includes formal rights, actual property rights and targeted property rights, i.e. legal status de jure, de facto and optatus. Depending on the established goals (FAT framework) and legalization policy measures, several types of state interventions could be diversified according to the Credibility Scale and Intervention (CSI) Checklist. The credibility of legalization policy measures and success of the legalization policy in both analyzed contexts would be assessed.

Regulating legalization in the systemic sense means a special case of dynamic systems characterized by complexity, stochastic behaviour and relative autonomy of behaviour, singularity of behaviour or reactions. Since the 1990, several laws on legalisation were passed in Serbia. Their contribution was very poor given that a very small percentage of property was legalised, the interventions produced insignificant results, and every law postponed the deadline for legalisation. According to the Law on special conditions for registering property rights on buildings constructed without a building permit, the registration of property rights enables legal security in the real estate trade. Law on the legalization of illegal buildings, Law on property legalisation and the rules of procedure book on the criteria for legalisation prescribes the payment of legalization fees and development fees, which are 99% less than regular value for legal construction defined by local decisions. This indicates the limiting of the municipal authorities because the national government prescribes the reduction of taxes for building land development; the discrimination of owners who legally constructed buildings and paid the mandatory taxes; and the reduction of the city/local budgets. Preliminary assessments of the effects of property legalization (ICBs) in Serbia in accordance with the legislation would refer to economic efficiency, fiscal effects, public local finances and possible public risks.

Finally, it is assumed that the implications of ICBs arise from their juxtaposition and status of ‘lock-in’, i.e. relations in property rights, planning and laws, and their formal ‘opening’. The issues of legitimacy and legal certainty of ICBs could reflect in the policy of legalization and the possible long-term survival of illegality and uncodified property rights as a parallel unofficial system, with unpredictable and uncertain consequences for urban development, planning and governance.