You don't have to mandate people demolish and rebuild: the market should adjust for this. (In short, if you have a one/two family dwelling on a piece of land, a

You don't have to mandate people demolish and rebuild: the market should adjust for this. (In short, if you have a one/two family dwelling on a piece of land, and each dwelling is worth $1.2M, then demolishing and rebuilding to provide five dwellings each worth $1.0M results in a net profit for the landowner.)