The same problem exists in other games, like Ultima Online and FFXIV. There's a solution for this, which was used in EVE Online: https://www.gamedeveloper.com/business/digital-real-estate-a...
It works in real life too: https://gameofrent.com/
It works in real life too: https://gameofrent.com/
I fleshed that out later into a full fledged policy paper / how-to guide: https://progressandpoverty.substack.com/p/land-value-tax-in-...
Finding all my gamasutra.com bookmarks nuked one day with the rebrand still makes me salty.
Rant aside, this is what it tries to link to about 2/3 through the article:
https://www.gamedeveloper.com/design/how-i-used-eve-online-t...
For instance, In King County, WA, property taxes are 1.1%. If you own one 1 million dollar property then that's $11,000/year you have to pay.
Set land value tax to 1.1% * (number of properties you own - 1). Say you own 2 1 million dollar properties in King County. That would be 1.1% of $2,000,000 property taxes, or $22,000/year. Plus an additional $11,000 for the first one, for $33,000/year.
Fine.
But then if you buy a third one, then it goes $33,000/year property taxes PLUS (1.1% * (number of properties you own - 1) = $22,000 * 2 = $44,000, or $77,000/year to own three 1 million dollar properties.
It would quickly and effectively destroy any rent profit available, and make holding the properties for investment purposes an exponentially untenable position.
If they rolled out this tax over a 7 year period there would be plenty of time for the market to gently deflate as conglomerates and corporations divested their investment properties.
Your application of land value tax only to subsequent homes owned otherwise avoids many of the other issues I’ve seen with land value tax, however. Most naive hypothetical applications of land value tax without your caveat tend to gloss over or ignore my main concern with LVT, that it leads to poorer homeowners being priced out of their own homes by unserviceable tax liabilities, when those same poor folks might otherwise most benefit from homeownership.
I believe that would be straining at flies while letting camels pass.
The issue isn't with groups of people each using their single exemption to own a second property while avoiding land value taxes.
The issue is single corporations using billions of dollars of land value as backing for loans to purchase houses at prices citizens can't afford in order to bilk them out of rent for the rest of their lives.
A land value tax with a single owner exemption would solve the larger problem.
Land is still finite, so there will be competition for portal locations. Connectivity is valuable, so land with easy access to a lot of portals will raise in value: who wants to walk through 20 portals when you could also reach your destination in 1 or 2? This means there is a very strong incentive for the formation of a portal monopoly or cartel.
Anyone in control of a central portal hub is able to make a lot of money by opening a new portal from that hub to a far-off location. That far-off location was previously worthless, but the presence of a portal suddenly makes it extremely valuable. And being able to charge people for portal passage makes it even worse: Not only can you profit from land speculation, you're now basically charging rent on the land you sold too!
The only way to really work around this is to have essentially infinite land, accessible from a single central portal. But as the linked article mentions, that's quite immersion-breaking.
Proves once again Minecraft is the greatest game ever created.
Arguably it came with the expected trade-offs zoning laws have in real-life, in that zones intended for their equivalent of guilds are often empty/dead now since there are not that many active guilds, and "legacy" wards that still have personal housing and guild housing intertwined are a lot more active and diverse.