[iterminate]

A mortgage. The cost of ownership only exceeds the cost of renting because ownership costs have been driven up by profit making: historically (and still today in some countries) it was cheaper to buy a home than it was to rent. If landlords were restricted from buying homes then the costs of ownership would become affordable for the majority of people who rent. A Hacker News comment isn't the place to propose radical policy change but just for fun, consider a world in which the only way to become a landlord was by building property specifically to rent it out. The majority of rental properties were previously owner-occupier, landlords have decimated the amount of property available for owner-occupiers which has driven up costs (pushing more and more people into renting).

[fastball]

How do ownership costs get driven up by profit-making? That doesn't make much sense to me. Prices are driven by demand, which in turn increase the value of a property if supply doesn't rise to match. This sounds more like a problem of NIMBYism and such than a problem of "landlords exist".

> historically (and still today in some countries) it was cheaper to buy a home than it was to rent

This isn't broadly true. Historically, renting has existed for thousands of years. That wouldn't make any sense if owning was (until recently) always a more desirable prospect than renting.

[iterminate]

> How do ownership costs get driven up by profit-making?

The cost of owning a home for the average person is primarily reflected in the amount they pay for their mortgage. The cost of a mortgage is based on the value of the property as mortgages are secured against the property. The value of a property is determined by demand which is driven up when the market is filled with players who have easy access to capital to turn properties into profit-generating tools.

> Historically, renting has existed for thousands of years. That wouldn't make any sense if owning was (until recently) always a more desirable prospect than renting.

Renting is a very useful tool that many people (including myself) value highly: I rent out of choice. However, renting as a necessity (because it is the only option to live) is the position most renters find themselves in. If you poll the people in your life who are earning an average income you'll find most would much prefer to own their home because it provides much more security and it's typically more cost effective over the long term.

If there's 10 families and 10 houses for sale, each family can own their own home. The most desirable houses will cost more but at the end of the day, every family will own their home at a price dictated by the amount that they can afford.

If there's 10 families and 10 houses but only 5 are for sale with the other 5 owned by a landlord, the price of the houses for sale is pushed up not just based on desirability but also based on necessity, up to the price that 5 of the families cannot afford. At that point, the remaining 5 families need somewhere to live and so they are forced to rent from the landlord who can set their own price. Everyone (including those who were lucky enough to buy their homes) is paying more all because a landlord is involved.

Home ownership isn't the perfect option and so landlords provide some value, however, that value could still be realised without interfering with the ownership market. Most property is built to be occupied by the owner, it's only later that it gets taken out of the ownership pool by landlords with access to capital. Landlords purchasing owner-occupied property are much like cats let outside: they kill everything around them.

[shaftoe]

If demand for ownership is such that prices make |cost paying mortgage| + |cost maintenance, insurance, etc| < |income renting| then there's a clear profit from buying and renting as much property as possible. This will continue, increasing demand, until an equilibrium is met.

It works the other way as well to dampen demand for investment properties.