The argument seems to be "that landlords are already charging the maximum that tenants are willing to pay for access to a given location and so cannot arbitrarily raise rents when a LVT is imposed."

But, if the tenants now have more money in the form of UBI, then that argument doesn't hold.

No the argument is that the landlord will raise rents, but they will not keep them. The gain generated by UBI, by virtue of raising the value of the land underneath the unit, would be recouped by the LVT at tax time.

UBI is passed from the tenants to the landlord in the form of higher prices, but is recouped by the LVT, which cannot be passed in reverse from the landlord back to the tenant.