One of the most interesting things I've read in a while... The problem with this model is that it doesn't eliminate corruption. So a powerful corporation will want a piece of the landlease pie, and brag government officials so that they can claim land as their own, making it a tier-one land owner. How could this be avoided? 
I think after a while this will become the norm and we would see the end of the state as we know it, having a bunch of micro-corporate states everywhere. Although this could kinda be a good thing, on one hand, it creates competition, cuz how do you set prices when there is no competition?? That's another question that your system hasn't answered. You say it would be kind of like an auction system, but there's no reference price so...
Also, inflation in this system is inevitable, because you have a fixed amount of land and a growing population that will press on the demands on the system.
Another question, how do you prevent people stacking houses on top of each other like Favelas? I can see buildings growing taller and taller in the areas of lower prices and the higher price land going empty (yes I know this can create an auto-regulating tendency)