> Are there alternatives to the landlord system that are even remotely viable?
Owning housing, which means you need to maintain it and sell it when you want to move. That's a lot of work that many people don't want to deal with and would rather pay for the service of someone else handling that for them
Good point, landlords do provide a service. Are there any sources that show the benefit of landlords on the land they rent out? Just anything that can back up landlords contributing to a better housing environment.
I think another way to look at this is to consider what would happen if you banned renting. In a free market economy, people should be free to buy and sell goods and services. Clearly there's a demand to rent private housing (i.e. landlording) and I don't see a good reason to prevent that demand from being met. [AskEcon has a thread](https://www.reddit.com/r/AskEconomics/comments/184q6ns/what_would_simply_banning_the_practice_of_renting/kaxt1u2/) about some of the repercussions of banning renting.
An LVT and sufficient housing supply (from reducing anti-development regulations) is sufficient to address the housing crisis. The anger directed at landlords would be much better directed at the lack of an LVT and at restrictive development regulations. It's a misidentification of the core problem. It's like being mad at the baker for your bread prices being too high when the real issue is the government made it illegal to farm most of the country's arable land.
Again consider that the only alternatives are private ownership or renting public housing from the government, or I guess living outside. The second is an alternate model - see Singapore - but it's debatable whether that's better. That might be something for you to explore.
That is what I always point to when people I know go on these tirades: I have lived in two states and two countries in the past four years due to grad school; I absolutely would not have been able to move to Edinburgh and NYC if I seriously had to buy houses to live in both, let alone sell them on such short turnaround.
> That's a lot of work that many people don't want to deal with and would rather pay for the service of someone else handling that for them
That's not what a landlord does - that's what the property manager does. Landlords exist to provide capital, and the returns from that are well earned. This is 100% different from the returns gained from restricting who can use a part of the earth that the government has given you some control over.
Yes, there would be. They would exist to provide capital for improvements, take risks, and actually manage things getting done. All of this is important, and none of this has to do with the *land itself*.
The questions about the OP are about private ownership of land, and it's clear they are not meaning "landlord" as to mean "person who maintains a place that I rent out".
Yes, we agree. But to say that the landlord themselves is responsible for doing maintenance as was originally posted is inaccurate - even if it is the same person, the "property manager" and the "landlord" can be looked at as two separate beings with different utility.
> That's not what a landlord does - that's what the property manager does. Landlords exist to provide capital, and the returns from that are well earned.
To note though, the Landlord provides capital, specifically more liquid capital, to the property manager to fund things like maintenance and the cost of ownership of the building and land.
That is itself a service of sorts.
If you want to suggest something to be unnecessary, then you should at least propose an alternative. Everyone owns their own home/ apartment? Public housing?
Yeah, this is part of my confusion. I've seen nothing but attacks on landlords, some coming from important economists, yet there's nothing out there that argues why they're needed. I'm not saying they aren't, I'm just trying to find something to read about it. I should probably just read Henry George.
A lot of economists (rightly imo) think that landlords have too much power or that the economic returns to being a landlord are too high, but I can’t think of any non-cranks who don’t think landlords should exist
This is basically the crux of the matter. Landlords need to exist in some basic sense in order to maintain and market a rented property. Depending on the economic system you have in mind, they also exist as a matter of risk sharing, where the property owner bears the investment and cash-flow risk which the renter would rather pay not to bear.
What economists hate is when landlords seem to collect profits that clearly outstrip this value that they should be providing. They also hate it when landlords put pressure on the political system to protect their profit stream or stop land from being allocated to it's first best use. This is inherently tricky for a limited resource like land, and it is therefore not uncommon for these situations to arise.
Others have addressed the points as mentioned, I will address this part specifically:
> Are there alternatives to the landlord system that are even remotely viable?
So something other than either individual ownership or renting from the owners? There are a couple.
1. [Co-op Housing](https://www.rocketmortgage.com/learn/what-is-co-op). Basically buying a share of a building to reside in it. Have all of the same inherent difficulties for individuals raising capital to buy a place. Not a bad model, just doesn't replace renting.
2. [Community Land Trusts](https://groundedsolutions.org/strengthening-neighborhoods/community-land-trusts/). Basically a non-profit owns the land and leases it to builders, and usually there are deed restrictions on usage to keep it as affordable housing, thought that's not always required. Works to replace rental housing, if the built housing is rented, but has a lot of the same issues with all non-profits. Namely, where does the initial capital come from? Even running with no ongoing capital needs, land and housing takes capital to acquire and build in the first place. This works, but needs a lot of capital with low motivation to profit seek.
I think our young protagonist is about to hear the siren song of r/Georgism. 🔰
That said, landlords provide a valuable service in the economy. Let's imagine that land costs are low, so there's little economic rent in extraction in leasing an apartment. There's still economic value!
Owning a home is not somehow intrinsically always better than renting one. Renting vs owning is a matter of preferences, both economic and otherwise.
An owner or landlord makes a huge upfront investment, likely by incurring a big pile of debt, makes multi-decade contracts, and then owns a depreciating asset, from which they derive consistent real/virtual cashflow. They face high transaction costs to enter or exit the position, and they concentrate their capital and their risk exposure in a single asset.
A renter has little upfront cost, no debt, minimal contractual commitments, and can allocate their capital to appreciating assets (i.e., the stock market) while paying a monthly fee to buy housing. They have relatively low transaction costs and can make changes relatively easily.
If you set aside the asset speculation and economic rent extraction parts of land ownership, this is actually a very nice case of different people having different preferences making a deal. The landlord gets to charge renters a premium because the landlord takes on some risk and handles some transaction costs; renters are fine with that, because renters get to manage their capital flexibly.
It's like buying vs leasing a car. There's no real scarcity constraint in that market, and people choose to buy or lease based on a variety of reasons. The lease providers aren't parasites or anything; they're offering a service that some people want.
(Still, Georgism good, land speculation bad, LVT please 🙏)
This is a great response, thank you! I will definitely bump George's works up on my reading list, I've seen him referenced a few times now, and had no idea his work was so influential.
It hasn't been influential in the wider world in the last century or so, but recent attention on housing affordability and urbanism has given it some renewed interest, at least in odd Internet corners like this. Hopefully we'll get there someday.
In any case, happy to help.
> Intuitively I think that land should be privately owned, but the typical rules of competition and demand seem to not work very well with land
Read this https://www.henrygeorge.org/pcontents.htm
It addresses basically every single question you have, and shows that the contradictions you are talking about are actually real. I've linked a simpler version that uses much less poetic and flowery language and has less of an "effect" than George's original work, but it is much more understandable and easier to read for a modern audience. There is constant repetition and assumptions of 1800s era knowledge present in the original text so this should be a much easier starting point for understanding.
I rent instead of own because I am not sure how long I want to live where I currently live, don't want to deal with the transaction costs of buying and selling a house, don't want to be responsible for upkeep, don't want to do research and/or deal with the uncertainty of whether where I live is likely to increase or decrease in value in the future, and don't want my capital locked up in the most illiquid asset one could possibly have. That's what landlords provide
Renting is a preferable arrangement to some consumers over buying. This is true for housing, cars, tools, datacenters etc
There's no good reason it should be banned
It would be a lot easier to compare the pros and cons of renting vs owning if our housing supply was keeping up with demand. In that case, buying a house would be a mediocre investment, and the benefits of owning (eg. stability), might be balanced out by the benefits of renting (eg. ease of moving, esp. for young people who haven't settled down yet). Landlords then might be seen more as service providers, instead of parasites hoarding a resource and locking people out of the primary means of growing generational wealth.
If you aren't a socialist, then you believe in an economy based on individual choice. In such an economy nothing is strictly necessary, but anything can exist if people make the appropriate choice.
Landlords exist because people choose to be landlords, and other market participants choose to transact with them.
I don't think this is a very good way of framing it, the government controlling an aspect of the economy does not equate to that economy being socialist.
The person I'm responding to is talking about the entire economy. They said "anything can exist if people make the appropriate choice", but this clearly isn't true, because you can't make the choice to own public utilities, own illegal businesses, etc.
It's not pedantry, it's a response to a sloppy definition of what makes an economy socialist. I'm just trying to ask a question, you don't need to get upset right away.
> and other market participants choose to transact with them.
This is blatantly not true. You do not have a choice for whether or not you live on land - land is monopolistic by its very nature. This is why economic rents on land are equivalent to the absolute maximum people are willing to pay to occupy that land.
You did have to interact with the fact that private domain over a plot of land has a cost when you bought the thing - you paid for the limited control of your land as well, didn't you?
I bought the house from another private entity, who was not a landlord. It's a common thing, actually.
(I'm using the common definition of landlord as one that owns land and rents it, maybe you are using a different definition? Either way I think we aren't connecting. Sorry I can't offer more.)
I think that is the difference here - I'm kind of interchangeable using the term "landowner" and "landlord". Even if you aren't actively renting land, you still benefit from it growing more valuable.
There are homes owned by the government and provided to people today. Would you want to live in a housing project? Or would you prefer to rent from a landlord?
In addition to what's been said, something doesn't need to be necessary to justify ots existence. At least when it comes to justifying existence under a system of liberal property rights. You basically need to strongly prove that the thing is harmful and that you can't reduce the harm in ways other than banning it if you want to ban it. The burden is on the other side
One of the challenges is the housing market and other land-related markets are heavily regulated. Unfortunately, that means what we observe today often has little bearing on how well these markets could function.
> Are there alternatives to the landlord system that are even remotely viable? Owning housing, which means you need to maintain it and sell it when you want to move. That's a lot of work that many people don't want to deal with and would rather pay for the service of someone else handling that for them
Good point, landlords do provide a service. Are there any sources that show the benefit of landlords on the land they rent out? Just anything that can back up landlords contributing to a better housing environment.
I think another way to look at this is to consider what would happen if you banned renting. In a free market economy, people should be free to buy and sell goods and services. Clearly there's a demand to rent private housing (i.e. landlording) and I don't see a good reason to prevent that demand from being met. [AskEcon has a thread](https://www.reddit.com/r/AskEconomics/comments/184q6ns/what_would_simply_banning_the_practice_of_renting/kaxt1u2/) about some of the repercussions of banning renting. An LVT and sufficient housing supply (from reducing anti-development regulations) is sufficient to address the housing crisis. The anger directed at landlords would be much better directed at the lack of an LVT and at restrictive development regulations. It's a misidentification of the core problem. It's like being mad at the baker for your bread prices being too high when the real issue is the government made it illegal to farm most of the country's arable land. Again consider that the only alternatives are private ownership or renting public housing from the government, or I guess living outside. The second is an alternate model - see Singapore - but it's debatable whether that's better. That might be something for you to explore.
Do you want to buy a house to live in where you go to college? That's the value landlords provide.
That is what I always point to when people I know go on these tirades: I have lived in two states and two countries in the past four years due to grad school; I absolutely would not have been able to move to Edinburgh and NYC if I seriously had to buy houses to live in both, let alone sell them on such short turnaround.
I was not on a tirade, I was genuinely asking the question. After some more reading I am now firmly pro-landlord.
> That's a lot of work that many people don't want to deal with and would rather pay for the service of someone else handling that for them That's not what a landlord does - that's what the property manager does. Landlords exist to provide capital, and the returns from that are well earned. This is 100% different from the returns gained from restricting who can use a part of the earth that the government has given you some control over.
A relevant distinction, though in practice many landlords are fulfilling that role
A vitally, monumentally important distinction. Landlords who fulfill that role are wearing two hats, as both landlord and property manager.
There would still be landlords if we passed an LVT, which I support
Yes, there would be. They would exist to provide capital for improvements, take risks, and actually manage things getting done. All of this is important, and none of this has to do with the *land itself*. The questions about the OP are about private ownership of land, and it's clear they are not meaning "landlord" as to mean "person who maintains a place that I rent out".
The landlord would be the landowner who's paying the LVT. The property manager handles maintenance and acts as a representative of the landlord
Yes, we agree. But to say that the landlord themselves is responsible for doing maintenance as was originally posted is inaccurate - even if it is the same person, the "property manager" and the "landlord" can be looked at as two separate beings with different utility.
> That's not what a landlord does - that's what the property manager does. Landlords exist to provide capital, and the returns from that are well earned. To note though, the Landlord provides capital, specifically more liquid capital, to the property manager to fund things like maintenance and the cost of ownership of the building and land. That is itself a service of sorts.
True, this is just more specific
If you want to suggest something to be unnecessary, then you should at least propose an alternative. Everyone owns their own home/ apartment? Public housing?
Yeah, this is part of my confusion. I've seen nothing but attacks on landlords, some coming from important economists, yet there's nothing out there that argues why they're needed. I'm not saying they aren't, I'm just trying to find something to read about it. I should probably just read Henry George.
A lot of economists (rightly imo) think that landlords have too much power or that the economic returns to being a landlord are too high, but I can’t think of any non-cranks who don’t think landlords should exist
Fair point.
This is basically the crux of the matter. Landlords need to exist in some basic sense in order to maintain and market a rented property. Depending on the economic system you have in mind, they also exist as a matter of risk sharing, where the property owner bears the investment and cash-flow risk which the renter would rather pay not to bear. What economists hate is when landlords seem to collect profits that clearly outstrip this value that they should be providing. They also hate it when landlords put pressure on the political system to protect their profit stream or stop land from being allocated to it's first best use. This is inherently tricky for a limited resource like land, and it is therefore not uncommon for these situations to arise.
Others have addressed the points as mentioned, I will address this part specifically: > Are there alternatives to the landlord system that are even remotely viable? So something other than either individual ownership or renting from the owners? There are a couple. 1. [Co-op Housing](https://www.rocketmortgage.com/learn/what-is-co-op). Basically buying a share of a building to reside in it. Have all of the same inherent difficulties for individuals raising capital to buy a place. Not a bad model, just doesn't replace renting. 2. [Community Land Trusts](https://groundedsolutions.org/strengthening-neighborhoods/community-land-trusts/). Basically a non-profit owns the land and leases it to builders, and usually there are deed restrictions on usage to keep it as affordable housing, thought that's not always required. Works to replace rental housing, if the built housing is rented, but has a lot of the same issues with all non-profits. Namely, where does the initial capital come from? Even running with no ongoing capital needs, land and housing takes capital to acquire and build in the first place. This works, but needs a lot of capital with low motivation to profit seek.
Thank you for the reading material!
I think our young protagonist is about to hear the siren song of r/Georgism. 🔰 That said, landlords provide a valuable service in the economy. Let's imagine that land costs are low, so there's little economic rent in extraction in leasing an apartment. There's still economic value! Owning a home is not somehow intrinsically always better than renting one. Renting vs owning is a matter of preferences, both economic and otherwise. An owner or landlord makes a huge upfront investment, likely by incurring a big pile of debt, makes multi-decade contracts, and then owns a depreciating asset, from which they derive consistent real/virtual cashflow. They face high transaction costs to enter or exit the position, and they concentrate their capital and their risk exposure in a single asset. A renter has little upfront cost, no debt, minimal contractual commitments, and can allocate their capital to appreciating assets (i.e., the stock market) while paying a monthly fee to buy housing. They have relatively low transaction costs and can make changes relatively easily. If you set aside the asset speculation and economic rent extraction parts of land ownership, this is actually a very nice case of different people having different preferences making a deal. The landlord gets to charge renters a premium because the landlord takes on some risk and handles some transaction costs; renters are fine with that, because renters get to manage their capital flexibly. It's like buying vs leasing a car. There's no real scarcity constraint in that market, and people choose to buy or lease based on a variety of reasons. The lease providers aren't parasites or anything; they're offering a service that some people want. (Still, Georgism good, land speculation bad, LVT please 🙏)
This is a great response, thank you! I will definitely bump George's works up on my reading list, I've seen him referenced a few times now, and had no idea his work was so influential.
It hasn't been influential in the wider world in the last century or so, but recent attention on housing affordability and urbanism has given it some renewed interest, at least in odd Internet corners like this. Hopefully we'll get there someday. In any case, happy to help.
> Intuitively I think that land should be privately owned, but the typical rules of competition and demand seem to not work very well with land Read this https://www.henrygeorge.org/pcontents.htm
I've heard of George a few times now, I will definitely read poverty and progress at some point.
It addresses basically every single question you have, and shows that the contradictions you are talking about are actually real. I've linked a simpler version that uses much less poetic and flowery language and has less of an "effect" than George's original work, but it is much more understandable and easier to read for a modern audience. There is constant repetition and assumptions of 1800s era knowledge present in the original text so this should be a much easier starting point for understanding.
I rent instead of own because I am not sure how long I want to live where I currently live, don't want to deal with the transaction costs of buying and selling a house, don't want to be responsible for upkeep, don't want to do research and/or deal with the uncertainty of whether where I live is likely to increase or decrease in value in the future, and don't want my capital locked up in the most illiquid asset one could possibly have. That's what landlords provide
Renting is a preferable arrangement to some consumers over buying. This is true for housing, cars, tools, datacenters etc There's no good reason it should be banned
It would be a lot easier to compare the pros and cons of renting vs owning if our housing supply was keeping up with demand. In that case, buying a house would be a mediocre investment, and the benefits of owning (eg. stability), might be balanced out by the benefits of renting (eg. ease of moving, esp. for young people who haven't settled down yet). Landlords then might be seen more as service providers, instead of parasites hoarding a resource and locking people out of the primary means of growing generational wealth.
If you aren't a socialist, then you believe in an economy based on individual choice. In such an economy nothing is strictly necessary, but anything can exist if people make the appropriate choice. Landlords exist because people choose to be landlords, and other market participants choose to transact with them.
I don't think this is a very good way of framing it, the government controlling an aspect of the economy does not equate to that economy being socialist.
it equates to that aspect of the economy being socialist, though. This is pedantry.
The person I'm responding to is talking about the entire economy. They said "anything can exist if people make the appropriate choice", but this clearly isn't true, because you can't make the choice to own public utilities, own illegal businesses, etc. It's not pedantry, it's a response to a sloppy definition of what makes an economy socialist. I'm just trying to ask a question, you don't need to get upset right away.
> and other market participants choose to transact with them. This is blatantly not true. You do not have a choice for whether or not you live on land - land is monopolistic by its very nature. This is why economic rents on land are equivalent to the absolute maximum people are willing to pay to occupy that land.
Um... I own a house and don't ever transact with a landlord. It's a common thing, actually.
You did have to interact with the fact that private domain over a plot of land has a cost when you bought the thing - you paid for the limited control of your land as well, didn't you?
I bought the house from another private entity, who was not a landlord. It's a common thing, actually. (I'm using the common definition of landlord as one that owns land and rents it, maybe you are using a different definition? Either way I think we aren't connecting. Sorry I can't offer more.)
I think that is the difference here - I'm kind of interchangeable using the term "landowner" and "landlord". Even if you aren't actively renting land, you still benefit from it growing more valuable.
There are homes owned by the government and provided to people today. Would you want to live in a housing project? Or would you prefer to rent from a landlord?
Historical examples of landlords being abolished leads me to answer the latter.
In addition to what's been said, something doesn't need to be necessary to justify ots existence. At least when it comes to justifying existence under a system of liberal property rights. You basically need to strongly prove that the thing is harmful and that you can't reduce the harm in ways other than banning it if you want to ban it. The burden is on the other side
One of the challenges is the housing market and other land-related markets are heavily regulated. Unfortunately, that means what we observe today often has little bearing on how well these markets could function.
Do you want to ban the ability for people to rent? No? Then you already know why landlords are necessary.