We're talking about regulating the use of a limited-supply common good: the land in a city. The residents of that city have the authority to regulate the use of that land to ensure that it is providing the desired benefits, in this case housing. They mechanism by which the residents can regulate land use is taxation imposed by an elected municipal government.
More broadly: the only sense in which one can "own" property is within the framework that society has created. If there was no society or government, your land title would mean nothing and anyone with more physical power than you would take your home as soon as they so desired. Fortunately, we live within a civilized society which enables ownership in a sense other than immediate possession. However, that framework of ownership has a caveat that allow property to be reclaimed if the public good demands it (cf. eminent domain). The framework could have been built without that escape hatch, but that would have caused its own problems.
This example isn't specifically eminent domain, but the same principle is at play: regulation of common goods by a collective. Any introductory class in game theory will provide half a dozen examples of why this is necessary.
There are many points where I disagree, and I wrote several but prefer to keep it short.
This is a tax to gather funds, and the housing situation is a collateral.
This tax revenue is not going to be used towards any cause, let alone efficiently, to reduce the housing problem.
If this tax is levied, and then economists see that it is ineffectual to housing, or even makes it worse, but the tax does produce revenue, it will not be reversed.
If the housing situation improves in the future either because of this tax, or because of market conditions (like more dwelling units being built, or change in global trends of property) this tax will not be removed.
This extra tax revenue does not come with a reduction of taxes in other areas.(it is not a shift of the tax burden, its an increase).
A short list to at least question the intentions and effects of such policy:
1) There is an ill-shaped enemy that must pay (Rich foreigners)
2) It uses a justification that applies to many other use cases but its only applied here (we can decide to tax you on what you do with your property, and the only one we do right now is to you X group, because you do Y.)
3) It doesnt represent an understanding or a solution to the underlying problem.
Maybe it's a larger home (say 5 bedrooms) and it's not near a university or college so students wouldn't want to live there, and the market for huge rentals like that isn't very good. Or maybe the market rent for the type of house is lower than the expected price appreciation /and/ you can sell it for me if it hasn't been lived in, so it's worthwhile to sit & flip rather than rent it out.
More broadly: the only sense in which one can "own" property is within the framework that society has created. If there was no society or government, your land title would mean nothing and anyone with more physical power than you would take your home as soon as they so desired. Fortunately, we live within a civilized society which enables ownership in a sense other than immediate possession. However, that framework of ownership has a caveat that allow property to be reclaimed if the public good demands it (cf. eminent domain). The framework could have been built without that escape hatch, but that would have caused its own problems.
This example isn't specifically eminent domain, but the same principle is at play: regulation of common goods by a collective. Any introductory class in game theory will provide half a dozen examples of why this is necessary.