It seems that landlords are simply "charging what the market will bear", yielding greater profits for them at the expense of the renter's budget.
But what if the script were flipped? What if the renters could be their own landlord without having to directly own property?
This is the idea behind the Renter's Real Estate Investment Trust (REIT).
The Renter's REIT would be a private company that buys apartment buildings and the associated properties where applicable.
Since the objective of the Renter's REIT is not to maximize profit but to expand (or at least maintain) affordable housing, the REIT charges rent based only on the operating and maintenance costs of the property, plus 10% (details below). Operating and maintenance costs include managing board salaries, accounting & legal costs, loan repayments, taxes, fees, and property management costs.
When tenants move in, the "security deposit and first month's rent" is used to purchase shares of the REIT (see Share Price below).
When tenants move out, there are options. If the renter relocates into another property owned by the REIT then there is no need for a security deposit or first month's rent; it was already paid at the first property. But if the tenant relocates into a property not owned by the REIT, the REIT must buy back the shares at the current price (see Share Price below).
The mandatory buying and selling of shares by tenants incentivizes the renter to maintain and improve existing properties, as well as expand the property portfolio of the REIT so that others can share in the affordable housing.
-- Managing the 10% Overhead --
At each annual investors (tenant) meeting, a vote is held to dispose of the 10% overhead accumulated from last year. Disposition is done either as an investment or a dividend.
The default disposition is investment, meaning acquiring new property, improving existing property, or hold in reserve (probably as an investment into a stock market passive index fund for use later in acquiring or improving property). The REIT managing board are required to present an investment plan to the shareholders for voting.
Once a decision is made to use the funds for investment, this decision cannot be overturned. For example, it is not possible to use funds held in reserve to make a dividend distribution.
In order to make a dividend payment, some minimum voting threshold is required (perhaps 60%), and only the previous years' funds may be distributed.
-- Property Management --
Property Management company(s) would be contracted by the REIT managing board to maintain the property portfolio, including grounds-keeping and building maintenance. At the annual shareholder meeting, shareholders can vote to retain the current property management companies at the annual meeting. If a property management company is rejected, the REIT managing board are required to find and contract replacements.
The incentive here is to find and keep good property management companies so the property portfolio maintains is value and the tenants have good housing in which to live.
-- Share Price --
Calculating the share for a private company is typically difficult, but since the REIT is only managing a real estate portfolio and financial accounts it should be very easy to calculate asset values and cash flows to determine a fair price for the outstanding shares.
Why it may not work --- corruption.
This is something that needs to be actively managed on an ongoing basis. Otherwise, whoever is in charge of day to day operations will just hire friends, family and associates to provide all the maintenance services at inflated rates and look to scam the system in other ways.
For example, look for these same friends, family and associates to move into the apartments in order to gain inside influence --- maybe even "sweetheart" deals on rent at everyone else's expense.
I question if the short term "owners" have enough motivation and incentive to manage all that will be coming their way. At some point, it will start to look like a job.