A tax on the value of land - something people didn't produce, but comes from the value of society - is the proper way to raise income. You get rid of speculative leeches like this.
You still can't build on the wrong plot and sell it.
The root of the problem here is that the house is worth peanuts compared to the land, so the homeowner has nothing to gain from bargaining with the developer. We end up destroying something of value (housing) in the name of speculative land investment, which is a shame
The owner certainly could have sold that property with the house on it, and bought a much nicer empty lot.
That is not however what the existing owner wanted to build on the property, and as a result the building is damage to the property
And why should the landowner here bargain with the developer? The developer did not perform basic due diligence on easily a 200k+ investment
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That being said, georgism plays right into this issue without the developers negligence. With LVT any land with improvements that is not determined to be it's highest and best use will be bulldozed and replaced, which is also a shame.
I would love to see people find ways to make centralized government a value add in our lives, but as it stands there are too many people who want to continue to pile onto there responsibility regardless of the outcomes.