The spontaneous conversion of formal residential and commercial buildings into high-density, informal housing is a major policy issue in the inner cities of developing countries. Yet there remains little research material to date analysing the residence dynamics, environmental health and related policy implications of this form of settlement. This paper presents and compares findings from two preliminary studies of informal sub-divided housing in the cities of São Paulo, Brazil, and Johannesburg, South Africa. It points to some of the policy implications of the work, in the light of broader debate on the management of informal settlements, and calls for further research examining this housing form within developing countries.