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Some potential homeowners have bought customary land without any problems but it is important to understand the risks associated with it.
As citizens find it more difficult to purchase a home due to exorbitant prices of real estate in Port Moresby, some potential home owners are now looking to purchasing customary land to build their houses.
Land in Papua New Guinea is divided into Alienated Land and Unalienated Land. Alienated land is State owned and ownership is normally by issuance of a 99 year lease.
Alienated land makes up less than 10% of all land in Papua New Guinea. Unalienated land is basically customary land and takes up most of the land in Papua New Guinea.
One of the main drawcards for the sale of customary land is that the customary owners desperately need money.
Because of this desperation some landowners are selling at very low prices. Examples of this practice are already happening in suburbs like Taurama where traditional landowners are selling pieces of land with areas of 200 to 300 square meters at around K30,000. You cannot buy any alienated land for that price.
But why is it even an issue if one buys customary land?
The most important factor to consider when thinking of buying customary land is that ownership of customary land is governed by custom.
There can be uncertainty as to the rights and obligations of a particular landowner when disposing of land which makes one’s purchase a little more difficult. In other words, it is risky. You could buy the land from a particular landowner seller only to find out later that that seller did not have the rights to dispose of land or did not follow the customary procedure before disposing off the land. This could result in the land being taken away from you and you end up with a huge loss of funds and no land.
Some potential homeowners have bought customary land without any problems but it is important to understand the risks associated with it.
Alienated land by way of registration of title does have a clear way to show who owns the land or leases from the State. There are rules governing ownership and disposition. Customary land does not have that level of certainty and comfort.
Furthermore, commercial banks will unlikely agree to funding purchase of customary land simply because of the risk involved and their non-recognition of ownership of customary land as good security.
All in all, it is possible to buy customary land but bear in mind the risks. We strongly recommend that with any purchase of land whether it be customary or otherwise, seek the assistance of a legal expert.
