Illegal subdivisions are planned and organized squatter settlements. These usually occur in cities where the government owns large tracts of vacant land, with low opportunity cost, in the periphery of the city. Illegal settlements are started by unscrupulous land developers in league with corrupt government officials. Housing conditions are often better than in squatter settlements because the perception of secure tenure is higher.
Unlike squatter settlements which are started by dwellers themselves, illegal subdivisions are started by unscrupulous land developers who are often in league with corrupt elected and appointed government officials, including the police. With the protection of these corrupt officials these developers occupy government land, level it and subdivide it, according to government planning regulations, planning space for commercial, residential zones, schools, hospitals, religious institutions, recreation areas, primary, secondary and tertiary roads etc. In some cases such settlements were planned by planners in government agencies after office hours to earn extra income.
They sell these plots, at almost nominal prices, without services to low-income households in desperate need for shelter. The only thing they provide is water through tanker trucks. The developers also ensure that the families will not be evicted by using their political connections and through bribing the officials concerned. If the pioneering households find living without services, in the periphery of the city too difficult and leave, their investment is confiscated and the plot resold to others.
As the settlement grows the developers usually form a resident's welfare association which lobbies with government agencies to provide services. Services such as electricity connections are often illegally tapped from existing government infrastructure. The developer often reserves plots with commercial value or corner plots or plots on wider streets for sale once the settlement is well established.
The housing conditions in these settlements are often better than in squatter settlements because the perception of secure tenure is higher. In some ten to fifteen year old settlements surveys have shown presence of lower middle class families who could not afford housing elsewhere.
Another example of illegal subdivision is when landowners subdivide and sell their plots in contravention of government subdivision regulations. Such subdivisions often pay little attention to health and fire safety considerations. As the motive behind their development is maximum profit they often have no provision of public amenities like parks or open spaces. Furthermore, as they are developed by individual landowners, narrow roads contravening planning rules and a lack of coordination of transport access to lands around them can cause traffic congestion.