Not just transaction cost, but also the whole point of Georgist theory which is that it's supposed to stimulate development. Putting a skyscraper on a piece of land costs a lot of money, paid for by the returns to development. If someone who hasn't paid the capital costs of building that skyscraper (and the admin costs of letting it out) then has the right to buy the land under the developers and charge them the highest possible ground rent, the thin profit making opportunity disappears, and it becomes less costly to relinquish landholdings than to develop them only to lose them to the first entity that wants to capture the value of your investment in the skyscraper in ground rent.

Probably the only stable state for that sort of market is for the government (which not only usually has the lowest costs of capital, but also sets the ratio of LVT to property prices) to end up owning all the land. That model can work (see Singapore) but it very much depends on the quality of the government and doesn't replace tax revenue...