They will charge the maximum amount possible, no matter what their costs.
And the maximum amount possible is based on the cost of bringing more housing supply to the market aka the marginal cost.
Which comprises
1) Cost of land per year (which won't change as you'd be paying $10k a year tax rather than $10k a year in interest on the loan taken to buy the land)
2) Cost of building per year (which won't change)
And the maximum amount possible is based on the cost of bringing more housing supply to the market aka the marginal cost.
Which comprises
1) Cost of land per year (which won't change as you'd be paying $10k a year tax rather than $10k a year in interest on the loan taken to buy the land)
2) Cost of building per year (which won't change)