Constraints to land rental in KwaZulu: Analysing the transaction costs

Abstract

A land rental market has efficiency and equity advantages for farm households. This paper examines reasons for high transaction costs which inhibit land rental in rural KwaZulu, a less‐developed region of South Africa. At present, transaction costs are high because tenants and lessors bear unnecessary risk when renting land. This can be attributed largely to a conflict of laws. It is contended that transaction costs could be reduced by providing strong institutional support for a rental market.