In order to reach the full potential market value of urbanized land, land pooling or land readjustment (LP/LR) is a technique for assembling low-value land parcels on the urban fringe into plots ready for residential, commercial, or industrial use. After pooling the parcels, some of the plots are sold to cover redevelopment costs, some are set aside for affordable housing costs, and some are distributed to the landowners to make up for their original land parcels. LP/LR utilizes the differential in the original and future land value to finance development costs and ultimately, to result in public benefits.
LP/LR has been utilized in many different countries and in many different ways, but one of the most effective has been the use of LR in Chile after the 2010 earthquake and tsunami. With many households requiring repairs and reconstruction, LR offered middle-class homeowners a financial option. Landowners merged their parcels together in order to develop housing units of higher density. Essentially utilizing their land as a form of capital, landowners were successful in obtaining a house that had the same value as the land they contributed to the project.
Source:
UN-Habitat. (2021) The role of land in achieving adequate and affordable housing. UN-Habitat.
Link: https://unhabitat.org/the-role-of-land-in-achieving-adequate-and-affordable-housing