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What is the legal cost and time it takes to obtain a residential construction permit? Regulation in the construction industry aims to protect health and safety as well as to guarantee minimum housing and neighborhood standards. However, excessive regulation and red tape can increase costs for the formal construction industry, reducing the profitability of low margin projects —such as small-scale low-income housing—and the affordability of those developments for low-income families.
The figure shows that the legal costs associated with the construction of a single detached dwelling can be quite expensive in Latin American cities. On average, legal costs represent almost 5.6 percent of the property value, and it takes 2.1 months to land a construction permit, according to "Room for Development: Housing Markets in Latin America and the Caribbean", the latest edition of the IDB's flagship publication Development in the Americas.