Several land value capture instruments are used in the country, namely: charges for development rights, infrastructure levy and developer obligations (Table 2.6). Their adoption varies considerably, being more significant in large capital cities such as São Paulo, Rio de Janeiro, Belo Horizonte and Curitiba. The main obstacles to implementation, considering other cities, are the low demand for building at higher density, the low quality of land registries, the lack of local administrative capacities and reduced political will. There is no legal framework for land readjustment or strategic land management.

Brazil is a federal state with three autonomous levels of government: the Federal Union, the states (26 states and 1 federal district) and the 5 570 municipalities (OECD/UCLG, 2019, p. 448[1]). Each entity has their own constitution, which must follow the Federal Constitution of 1988 (OECD/UCLG, 2019, p. 448[1]).

All three levels of government can legislate about Urban Law, but the responsibility for implementing land use rules and ensuring adequate territorial development lies with municipalities (Articles 24, I and 30, VIII of the Constitution). Local planning authorities have high levels of discretion in issuing development approvals, negotiating with developers and collecting funds.

The City Statute provides the framework of the national urban policy, which includes instruments and rules about land value capture (Federal Law 10.257/2001). The constitutional principle of social function of property establishes that urban lands must be developed in accordance with the territorial development rules enacted in the Master Plan of each city.

Developers are subject to in-kind obligations to obtain approval for new development or development at higher density. The obligations are designed to compensate the impacts of development on public infrastructure and services adjacent to it. Local governments frequently adopt developer obligations, since they are part of the regular land use planning procedure for formal land subdivisions.

Developer obligations are negotiated between developers and local governments. Local governments have high discretion in issuing planning permits and negotiating with developers. The in-kind provisions can include land, public spaces, green areas, new roads, paving and parking space and must be executed during project development. No cash substitution is admitted.

The negotiation process is structured via the emission of project guidelines. Developers request project approval to the local planning authority, with assigned areas for roads, parking, public spaces and public utilities, according to the density and uses allowed in the zoning plan. The local authority may approve the project or, more commonly, indicate necessary changes, by presenting guidelines. The guidelines are specific to each project and take into consideration the adjacent urban grid, in terms of green spaces, traffic flows, public facilities and such. Developers must follow the guidelines to obtain building permission.

The main challenge to implementation is the lack of local administrative capacities. Another obstacle is the low levels of land formality, making it so that many developments are carried out without previous approval from the local planning authority. Without that approval, land subdivisions are considered illegal and cannot be registered in the title deed (art. 50 of the Law 6.766/1979).

Developers pay charges for development rights for zoning changes (density and use) and for building at higher density beyond an established baseline but within the maximum density permitted by local plans. Local governments make moderate use of this instrument and collect the revenues. Implementation is more prominent in large capital cities, such as São Paulo, where the real estate market is dynamic and the Floor Area Ratio is low, either historically or through legal reforms.

Local Master Plans and ordinances must specify the conditions and rules of operation, as well as the maximum Floor Area Ratio allowed in an area. The calculation method varies across cities too. In some cities, the charge is calculated as a percentage of the extra Floor Area Ratio multiplied by the average land price per square meter in the zone. In other cities, such as in São Paulo and Curitiba, the value of the charged is ultimately defined in the auction market. Either way, the charge is paid in cash at the time the development rights are issued.

The development rights can be transferred within the city or within a specific zone. When developers pay the charge, they are paying for the right to build at higher density, whenever the Master Plan allows them to do it. Therefore, they can choose to use the developments rights in one project or another, or even sell them to other developers. The local planning authority will constantly calculate the density that a given zone still supports in order to decide whether to approve a project with higher density or not.

Local governments may spend the revenues collected within a specific zone or within the whole city. Some cities have created urban development funds through which revenues are invested for urban development purposes, such as public spaces, public transportation, roads and parking, public improvements and social housing. Other cities invest the revenues in infrastructure and public transportation at designated urban renewal areas called Special Urban Operations (Operações Urbanas Consorciadas).

The main challenge to implementation is the low demand for building at higher density in secondary cities. Many cities lack local ordinances and sufficient technical capacity to design and implement the charges. There is considerable opposition from landowners and developers, who pressure local governments to reduce or even eliminate the charges. The low quality of land registries and reduced political will constitute additional obstacles to implementation.

Landowners may be required to pay a contribution to offset the costs of public works adjacent to their property, notably road construction, parking and street pavement. The infrastructure levy is the oldest land value capture instrument in the country, having been first enacted in 1934 and maintained since then. Local governments make moderate use of this instrument and collect the revenues.

The infrastructure levy is charged when the public improvement increases the value of benefited property owners’ land parcels and landowners have the capacity to pay. Benefitted property owners are identified according to distance to the public improvement. For pavement works, the distance is calculated longitudinally, whereas for projects with a specific location, the distance is measured axially.

The calculation formula takes into account the costs of public works and the estimated land value gains. The total amount of fees charged must aim to equal the total of land value gains generated, but it can never surpass the cost of the public improvement. Landowners must pay the fee in cash, upon completion of the public improvement.

The instrument does not yield significant revenues to local governments, because it is little used. Many cities lack local ordinances to enable implementation. When it is used, 70% to 90% of the costs of the public improvement are typically recovered through the fees paid by benefited property owners.

The main obstacles to adoption are resistance by property owners, reduced political will and lack of local administrative capacities to estimate the land value gains. Since the country adopts a non-market land valuation system, the land registries do not reflect actual market values. Hence, land value gains have to be calculated for every case. It is debated whether the fee should be estimated in a case-by-case basis, which would be fairer, or set beforehand in a municipal ordinance, which would facilitate collection.


[3] OECD (2022), “Subnational government structure and finance”, OECD Regional Statistics (database), (accessed on 13 January 2022).

[8] OECD (2021), “Subnational government structure and finance”, OECD Regional Statistics (database), (accessed on 25 November 2021).

[2] OECD (2017), Land-use Planning Systems in the OECD: Country Fact Sheets, OECD Regional Development Studies, OECD Publishing, Paris,

[1] OECD/UCLG (2019), 2019 Report of the World Observatory on Subnational Government Finance and Investment - Country Profiles, OECD/UCLG.

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