The "asset rich, income poor" issue is raised (and has been raised for decades!) and whilst it was popular once to discount the "little old lady" as an appeal to sentimentality (as a pro-land tax independent South Australian MP once did), I think it is important to find ways to accommodate such issues.

The easiest initial mechanism is subdivision. If Grandma Jones has a big block of land in a area that's now developing quickly, she can sell off parcels of it. If, for whatever reason, the land becomes extremely valuable and it is not longer plausible to hold onto a old shack when the place should really have a (insert: block of flats, factory, harbour etc) then I think that simple economics would have to take its course.