There is a solution to the housing problem besides home ownership and renting: Housing cooperatives. These are still relatively common in Germany, my parents live in a flat owned by a cooperative and are consistently paying less rent than I pay for my college dorms, despite living in the center of a major city.
The cooperative was founded by workers in the 19th century and has a single purpose: To provide affordable housing, satisfying the needs of their members. It isn't subsidized by the state, its business model is simply to distribute the expenses for building and maintaining the flats to their members.
Home ownership has the disadvantage of being too inelastic and imposing the risks of owning a house to individuals. Renting from a private company on the other hand means you constantly have to give up a significant portion of your income so someone else makes profit from basically doing nothing.
Cooperatives strike me as the best solution to this dilemma. It's of course not surprising that the Economist doesn't mention this at all, the flaws of their argument have been sufficiently demonstrated by other commenters. The basic recognition that home ownership is flawed is an important point though IMO.
I know people who live in cooperatives and I've explored it for myself as well.
You might pay less in a cooperative, but you're expected to be more involved in its internal politics and in keeping things running, so you're likely making up for the lower monetary price by paying with your time and energy.
There are also many opportunities for interpersonal conflicts.
> you constantly have to give up a significant portion of your income so someone else makes profit from basically doing nothing
When something goes wrong in the house I rent (which has happened multiple times), it's up to my landlord to fix it. The landlord also has to spend time and money on upkeep and maintaining the property.
It depends on the size of cooperative how much you have to be involved --- if it's only one house, you'll surely have to be involved. Other coops have thousands of members, in these you can choose to just be a renter (in fact most people do that in my parents coop, less than 10% go to the annual meetings etc.).
It's certainly true that individual landlords have some trouble with renting out their property. The majority of homes however is held by companies, whose administration deals with renters. Maintenance costs of a single home can be uncertain, but of a number of homes it's very predictable. So the risks of big companies holding properties is manageable, and in no proportion to the profits that big conglomerates such as Deutsche Wohnen make.
I've rented three different properties (2 flats and now a house) in Germany, in three different cities, and each time it was from an individual owner, not some faceless corporation.
I also own a property myself in a different country.
Big companies don't own the majority of homes in Germany[1]. This is just the left-wing version of right-wing people overestimating the number of immigrants in a country.
This is unfair. There is nothing wrong with passive income. Owning shares or bonds, or having a bank deposit is also "doing nothing" yet no one would blame anyone for it.
> There is nothing wrong with passive income. Owning shares or bonds, or having a bank deposit is also "doing nothing" yet no one would blame anyone for it.
The wrong part is that having passive income of that kind is a privilege that only few can reach, and it works by squeezing the rest. It isn't possible for everybody to have such passive income.
they are very comparable. Owning shares in a company that takes money to provide essential services? That has been the model of capitalism - fee for service - for a long time, and it has worked. The service gets provided, at the right price that the market can bear ,and still produce a profit for those providing the service. The alternative is to not have that service provided at all!
There's an entire political ideology which totally disagrees with you -- Georgism. Basically most of capitalism is fine, shares, bonds etc. but natural monopolies and value derived from land are not the same thing and must be treated specially. There's one very pithy way of expressing this which goes back to Adam Smith -- taxes on land do not cause economic inefficiencies in the same manner as other taxes.
The cooperative was founded by workers in the 19th century and has a single purpose: To provide affordable housing, satisfying the needs of their members. It isn't subsidized by the state, its business model is simply to distribute the expenses for building and maintaining the flats to their members.
Home ownership has the disadvantage of being too inelastic and imposing the risks of owning a house to individuals. Renting from a private company on the other hand means you constantly have to give up a significant portion of your income so someone else makes profit from basically doing nothing.
Cooperatives strike me as the best solution to this dilemma. It's of course not surprising that the Economist doesn't mention this at all, the flaws of their argument have been sufficiently demonstrated by other commenters. The basic recognition that home ownership is flawed is an important point though IMO.