I think this mindset comes from a misunderstanding of the cost of capital.

Buying and owning a house is not free - even if the entire thing had zero upkeep and maintenance. The money spend on the house (lets say 1m) has a cost associated with the foregone interest/income it could have earned you elsewhere (opportunity cost, basically)

Buying a 1m house, even if you borrow no money, costs you a net 50kpa (currently) in foregone, zero-risk interest income from a bank or the government. Them renting it out is just trying to earn a return on that investment (which is just putting upfront capital and hoping to earn more than it costs).

Sometimes they lose (I think housing in many places costs significantly more in interest than rental return right now), but largely they've done well because supply is constrained in most places leading to bidding up of prices. It's just a supply issue - not enough housing for everyone. There's no reason housing can't be both an investment and a place to live - Do you think farmers grow and sell food out of the goodness of their hearts?

Most places make it nigh-impossible to just chuck up a building for people to live in - local governments want permits, you have to provide minimum levels of parking, whatever. Even granny flats will get you in trouble in a lot of places. That's the problem, IMO. In few other fields is it so hard to actually invest in building more of something.

Well-meaning regulations that enforce a minimum standard of housing do have drawbacks as well - eg. minimum 50sqm apartments. It means people that might just want a single room apartment to live in have to buy (or rent) more property than they want or need. I think these make sense for things that are definitely net good (eg. insulation, efficiency standards, etc) for everyone as a whole, but less so when they translate into a oversized housing, excessive parking, and so on - things that add expense that might not be used.

>If it's affordable, then the value isn't going up and it's a poor investment.

Here in Tokyo, values generally do not go up, yet there are still plenty of landlords, who seem to use housing as an investment of sorts. Some landlords seem to be people who simply have owned a property a long time and want to rent it out in case they want to return to that house later (this happens when someone gets transferred somewhere by their employer). But the big apartment buildings are owned by large real estate corporations. I don't work in that industry, but I imagine they're making money simply on volume. Even though the building value falls to zero over the course of 40 or 50 years, it does seem to work out, and there are constantly new apartment buildings being constructed.

The problem isn't that the cost of renting is higher than the cost of mortgaging, the problem is that banks treat people who have to make a $2,500 monthly payment to live decently as if they can't be trusted with a $2,000 payment. People like me are charged a premium for shelter because we did things like...be financially responsible and avoid taking on unnecessary loans or credit card debt. And when we ask why we can't have the cheaper option, the response is...the bank doesn't trust us to make a payment that's _easier_ to make than the payment I'm working with right now?

It's blatant nonsense, which makes one wonder what the real reasoning is.

I think an insolvent renter is probably a smaller risk than an insolvent loanee, at least with certain assumptions. I'm not defending it, and have no background in it, but it seems possible.

But we're not talking about an insolvent renter, we're talking about a renter who's making their payments. A renter who makes payments every month at 2500 can, and regularly is, not approved for a mortgage at 2000 a month, even though--based on the payment history--the renter would not only be able to make those payments, the mortgage payment would be easier for them to make--and therefore less risky--than the rent payment.

> What's the alternative?

You would think this area would be ripe for innovative economic models and simulation, but in my entire life I've only heard of one alternative.

Any simulation that doesn't result in land owners getting richer will be a non-starter.

The solution as far as rent seekers see it, is to legislate and regulate to make housing more predictable. That is, like bonds, as the population expands housing should expand at a rate much less than is necessary to house the growth in order to drive up the value of their investment at a fixed rate.

To break that cycle you need a fluid market in land and cuffs removed from construction. If I can buy land + build at a rate that's substantially lower than the value of an existing property, I will. If 6 1950s character homes happen to be sitting on a good place to build instead 300 apartments, I will. In the case of low land prices / high land availability its more valuable to be a builder than a rent seeker.

But there are several issues, notably that people in government tend to be people who own property and want their guaranteed unconditional return.

Anecdotally, I know of someone local to me who owns a large hobby farm. They are getting long in the tooth, and went to sell it to fund their retirement. The only evaluations they received came in an order of magnitude lower than the average land sale price locally. This surprised them, as their farm has actually become engulfed by housing. They imagined, quite rightly, that their farm could easily be subdivided. So they set about doing that themselves. The council denied their application because it was over their quota. Bear in mind that the state I live in has a supposed 2% housing growth quota they have never met. The councils quota was an internal policy and not written down anywhere. They simply get the right to refuse rezoning for whatever reason they so choose. Now, at this point the owners were thinking that if they succeeded at getting the land rezoned and parceled out they would be able to sell directly to individuals. 40k per plot multiplied by x plots would certainly be enough for them to live on in retirement. Great idea honestly. They did eventually receive an offer for their land, well under local value, from a large house construction consortium. Turns out their game works like this:

1. Purchase land from someone at a heavily reduced rate. 2. Lean on government to get it rezoned. (often using inducements like agreeing to some maintenance costs, building a park or whatever) 3. Build commercial shopping and other sites nearby and rent those out as permanent assets. 4. Flip the individual lots for a set fee to downstream construction companies.

And ofc, politicians in all levels of government have extremely cushy relationships with these businesses. Taking campaign donations etc.

In effect, housing supply is being limited as a coercion tactic, for larger landholders (and government land release) to sell only to a small subset of land bankers / land arbitrageurs in deep with the government. And controlling such a large portion of new housing supply allows them to ensure that their investments never go backwards. In some instances they will purchase a large lot of land and just withold it from development for a decade until they think introducing that housing suits them.

Sorry for the rant, the tl;dr is that to remove land holding as an investment, the sure path is to move against the land bankers. Release heaps of land, rezone all the things. Just pump new dwellings hard. Crash their investments. Make everyone gunshy of property investment. It should be a market not guaranteed return for life.

> Obviously, renting needs to be an option

Ok, so if you acknowledge that being able to rent is a useful option, it means someone must own a place that gets rented out.

> Buying a house for the sole purpose of extracting profit makes you a financial vampire

You just said renting needs to be an option. But now you say nobody should buy a house to rent out for some profit.

So what's left? Should people buy houses to rent out at a loss, as a personal sacrificial service so renters can have a place to rent? Who do you expect to do that?

What's your actual solution proposal?

I feel like you only read the parts of my comment that you wanted to read.

I basically acknowledged that my view contradicts itself. People need the option to rent, but rent-seeking landlords are terrible people.

> What's your actual solution proposal?

I literally, word for word, said:

"What's the alternative? I don't know. But I don't need to have a solution in mind to point out the problem."

The onus of finding a solution does not have to lie with the people pointing out the problem.

> I basically acknowledged that my view contradicts itself. People need the option to rent, but rent-seeking landlords are terrible people.

I don't understand how it advances the conversation to say that, without backing it with some level of analysis (even if minimal, back of the envelope kind) of what you'd do differently.

> The onus of finding a solution does not have to lie with the people pointing out the problem.

It very much does. In most circles it is not considered productive to simply be negative without offering any potential ideas for improvement.