Squatter settlements built onillegally occupied land, usually through self-help, date back to the 1980s inmost countries in the region. Albania’s are more recent, dating from the early1990s. Located in peri-urban areas on public or private land, they have becomehome to hundreds of thousands of people. Although the initial developments mayhave been the result of the authorities turning a blind eye, particularlyduring the direct post-socialist inflow of migrants to cities, today theirscale presents a severe problem. For example, in Albania, informal housingsettlements contain up to a quarter of the population and 40% of the built-uparea in major cities. In Macedonia, they are home to 11% of the population inthe largest cities.

In Belgrade, Hadas (2003) highlights that informalsettlements present a dark mosaic in the city structure and compose up to 40%of the residential areas. Settlements forvulnerable groups such as Roma mahalas, refugees, and IDPs are often similar tothe squatter type but could have been established with the permission ofmunicipalities as a temporary, rapid response to the wars of the 1990s. Thesesettlements often exhibit deplorable conditions, with shacks built of recycledmaterials, plastic sheets, and leftover construction materials (Hadas, 2003).When they were built, residents were expected to live there for only a shorttime before relocating to camps or collective centres. Unfortunately, theinformal settlements turned out to be a permanent solution, only attractingmore people. In countries such as Montenegro, Albania, Kosovo, and Bosnia andHerzegovina, these slums are generally found in the urban periphery; in pocketsof marginal land close to industrial zones, railway lines, and waste dumps; orclose to collective centres for refugees. Illegal suburbansubdivisions are informal settlements, but they do not necessarily comprisepoor quality, under-serviced housing.

Unauthorized housing and mixed-usedevelopments built through self-help methods on unlawful subdivisions of agriculturalland are widespread in the peri-urban areas. The land is developed withoutofficial planning permission, the standard of infrastructure is low, and thesubdivision of land often does not meet planning standards for right-of-way,road access, and provision of public spaces. In some cases, the process iscommodified and used by builders to provide housing to middle-class families atbelow-market prices (Hadas, 2003). Residents build private roads, self-financeconnections to electricity and the water supply, and use different tactics tonegotiate legalisation.

Sometimes such developments take over high-qualitypublic land and environmental reserves, and the problems become significant asthe settlements grow larger and denser. Informal settlements include housing,tourist, and retail services, as the examples from Montenegro. Real estate istraded without registration in the cadastre (land registry), owners do not payproperty taxes, and economic activities (tourism and retail) remain informal.Informal settlements tend to cluster in two types of locations: the inner cityand peri-urban areas. The centralityof location often implies older, more established formations close to the oldcity or its industrial zones. Residents benefit from proximity to employmentopportunities but often live in substandard housing on sites exposed toenvironmental and health risks. Larger informal settlements often concentratein the periphery due to lower land values. These could be squatter settlementson public land or illegal subdivisions outside urban boundaries that graduallyaccommodate more diverse land uses, responding to the needs of local residentsand businesses (Simone, 2001).

The quality of housing is generally better. Some illegal or legally negotiatedconnections to existing infrastructure might ensure much-needed electricity andwater. Residents of these settlements are relatively successful in resistingattempts to relocate them after demolishing their homes. Encouraged bylegalization, homeowners and businesses begin to invest in roads, lighting,waste management, and small-scale public space improvements. Solution to informality in citiesAddressing theproblems of informal settlements requires a better understanding of the drivingforces contributing to their growth, as well as recognition of the interrelatedsystemic problems caused by inefficient urban planning and land managementsystems (McFarlane, 2012). The combined effect of the triple transition to ademocratic system, a market economy, and decentralised governance, coupled withthe challenge of war-related conflicts, is one of the major structural causesof this phenomenon.It is importantto note that urban planning has a critical role in guiding development anddefining appropriate strategies for integrating informal settlements to solvethe problem of inefficient planning processes at the local level. McFarlane(2012) cites that urban master plans, complemented by detailed regulatoryplans, provide the essential legal framework for regularisation.

In Serbia,Montenegro, and Bosnia and Herzegovina, the lack of such plans is a particularconstraint. In the view of Simone (2001), local governments have beenrelatively slow to develop a new generation of master plans, and the mostdynamic real-estate investments in the last 20 years have taken place throughad hoc amendments to the socialist detailed neighbourhood plans. In larger andolder informal settlements, regularisation cannot proceed legally without adetailed regulatory plan that documents the status quo and prescribes theparameters of development. Many specifications like setbacks, the width ofmajor roads, floor-area ratios, and maximum heights may have to be negotiatedproject by project. This practice causes delays, perpetuates informality, andcreates opportunities for arbitrariness and corruption. For example, inMontenegro, detailed plans are available for only about one-third of theterritory (Simone, 2001).The lack of plans is detrimental to the integration of informal developments.Furthermore, the lack of institutional capacity to effectively control andenforce compliance with detailed plans is an equally large challenge.

Ineffective LandManagement and Servicing In the absence of reformed planning and regulatoryinstruments to guide allocation, the land has been invaded and developed at ascale that may challenge any local government to provide roads and technicalinfrastructure to hundreds of thousands of new residents. Due to decentralisation,municipalities in the region have acquired many new functions without adequateresources to fulfil their mandates. Simone (2001) also notes that thisfinancial weakness, coupled with an inability to borrow in capital markets anda dependence on central government transfers, drastically reduces the capacityof local governments to develop and maintain essential services. In Tirana andPristina, where the urban population has almost doubled, and a large share ofnew development is informal, addressing the infrastructure deficit isimpossible under a regime of fiscal austerity. The process is constrained notonly by the lack of municipal funds and up-to-date plans but also by theincomplete land-registration systems.

Although most governments have recentlyaccelerated the development of modern cadastres, the coverage in most cities inthe developing nations still remains low. Policyinterventions range from legalisation, with a less extensive role for publicinstitutions and a lower commitment of public resources, to more comprehensivesolutions with higher costs (Foner,1990). In the context of fiscalausterity, the targeting of such measures is particularly important. If thethree types of policy intervention are related to the typology of informalsettlements, the first type, legalisation, could be universally applied and isappropriate for addressing the issue of integrating squatter settlements andillegal subdivisions. By contrast, relocation, due to its high costs for thepublic sector, should be reserved for socially disadvantaged households insquatter settlements or refugee camps. Foner (1990) posits that broadly definedcriteria in the policy matrix explicitly relate social targeting to efficiencyconsiderations and the degree of informality. Detailed urban plans are legallyrequired in all cases, but the content and approach to the development of suchplans may have to become more strategic and participatory as opposed toprescriptive or ad-hoc/opportunistic.

The informalsettlements in the post-socialist cities of southeast Europe are a distinctmanifestation of the post-socialist systemic transformation process,exacerbated by a lack of effective urban planning and enforcement of existingplans (Neuwirth, 2012). Informal land acquisitions, subdivisions, and otherself-help solutions are perhaps a natural coping mechanism for poor migrantsand refugees, as the rapidly growing informal housing in peri-urban areas. Attheir best, planning reforms across the region in the last five years haveresulted in improved legislation, infrastructure, and services, as well ascommunity-driven attempts to regularise informal settlements (Neuwirth, 2012).

At their worst, governments have turned a blind eye to the informal cities,which has constrained legalisation, exacerbated corruption, and forced the poorinto isolated areas.In addition tothe constraints created by the lack of detailed regulatory plans and incompletecadastre systems, municipalities across the region face the challenge ofregulating development in the absence of clear planning frameworks. Accordingto Dinero (2005), frequent changes in the normative and legal bases; newplanning and construction laws, standards, and norms; and the lack ofinstitutional capacity for enforcement are significant constraints for thesmall and underfunded departments dealing with building and occupancy permits (Dinero, 2005). In the globalbusiness survey carried out in 183 countries by the International Bank forReconstruction and Development (IBRD), southeast European countries rank wellin terms of having a competitive environment in which to do business. However,the survey places most of these countries at the tail end of the ranking withrespect to efficiency of the construction permit process.

In Montenegro, forexample, the permit process involves 19 procedures, takes about 230 days onaverage (20 days longer than construction), and costs nearly three times themonthly salary.

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