So my solutions to the problem you dont thik exists would probably make that house more expensive, because the value of the land underneath it is the main driver of price increases, and the person who owns the home does little to drive that, but reaps all the benefit.
This distorts the market and forces people into buying property. If someone could just rent for a few years then they probably would, and then we could write laws that support rrenters and owning and renting buildings would just be a boring business.
Instead, people do the sums and realise they are rewarded for buying that property and getting the free money as the area is developed. So we are all nudged into buying property and then we get laws that benefit people with property.
If there was a land value tax, then people living in low density homes in amazing locations in cities would be taxed out and high density homes would be built in their place. These would likely still be expensive, but by splitting the tax among several people, would be able to afford the land tax.
The result of the tax you are suggesting almost already exists. As the 5 floor town house gets to a price tag of 10mil the owner realises that it is easier to find 5 people who will pay 2mil for a 1 floor appartment than one person who wants a 10mil house.
This works for a while, but we are now at a point where 100's of prime location studio appartments are built and the price tag is the best part of $1mil. Here we hit the mismatch of affordability and function - if you have a mil for a property, you probably dont want a studio appartment. If you do want a studio appartment in central city, you probably only have 1/2 the money you need (if you are lucky).
The only real function of a land tax would be to depreciate the present value of the land by the future libaility of those taxes. In theory this just changes the cash flows, but also might have a dampening effect on growth which would be desireable / undesirable.
This distorts the market and forces people into buying property. If someone could just rent for a few years then they probably would, and then we could write laws that support rrenters and owning and renting buildings would just be a boring business.
Instead, people do the sums and realise they are rewarded for buying that property and getting the free money as the area is developed. So we are all nudged into buying property and then we get laws that benefit people with property.
If there was a land value tax, then people living in low density homes in amazing locations in cities would be taxed out and high density homes would be built in their place. These would likely still be expensive, but by splitting the tax among several people, would be able to afford the land tax.