The anti-regulation crowd should visit Ciudad de Angel

Governments of a certain stripe are always complaining about red tape, those darn regulations that stop people and businesses from getting on with things. 

Their supporters should come down to Honduras.

I pass Ciudad de Angel, a big new housing development, on my way out of Teguicgalpa. It looks pretty nice, although perched precariously on a hillside.

Too precariously, as it turns out. The new 200-home development is falling down around the devastated homeowners, who had hoped to stake their claim to middle-class status. (Prices ranged from $60,000 to $120,000, upmarket for these kind of developments around the edge of Tegus and San Pedro Sula. It was supposed to have a community pool and, of course, security.)

The construction was hopelessly substandard. The project was built on unstable hillsides. The developer dumped dirt and waste in several small ponds and then built on top of them.

Now the homes are falling down, literally. Four collapsed yesterday. Hundreds more are damaged, the roads are cracking along the fault lines. Owners complain of cracked walls, tile floors lifting, sewage flowing into their homes.

And the Honduran emergency commission wants people to abandon their homes because the entire development is unsafe and all the houses have severe damage.

Some residents have sued the Guatemalan developer, but the courts are hopeless. The worst in a bad region according to a report today.

Canadian homebuyers haven’t always been protected by regulation or the courts, of course. The leaky condo disaster plucked some $1.5 billion to $2 billion from people who thought they could safely buy a home, a huge loss. They had no legal remedies, because the developers shut down their companies and started anew.

But neither do Canadians face the risk of putting their life savings into a development that falls down around them.

It’s easy enough to trot out examples of unnecessary regulation.

But the notion that all rules and regulation developed by government are ‘red tape’ designed to ensnarl people who just want to get something done is destructive rubbish. As is the notion that buyers should somehow do their own geological surveys before they buy a home in what looks like a legit development.

Just ask the people in Ciudad de Angeles.

Footnote: Ian Reid has a look at another aspect of regulation here.