Economic reform, overlapping property rights, and polarisation in the real estate market

Economic reforms in many developing countries encompass a number of structural macro-adjustment programs with varying intensities. Adequate attention, however, has not been given to the archaic rent control and tenancy laws, which have substantially distorted the real estate market. A theoretical model is developed to analyse the overlapping property rights and stagnation created by the tenancy, rent control, and taxation laws. Utilising cases from South Asia, we show how liberalisation under existing archaic laws can further polarise the real estate market, and make the reforms socially and politically unsustainable. The historical stagnation, post-reform polarisation and demand-supply imbalances in the housing market are staggering. Reforms in the property market must reach a critical mass requiring drastic and fundamental changes in order to succeed and be sustainable.