There are situations where it does make sense to rent or put a property up for rent. For example, if you are relocating temporary for a job or education, it would make a lot of sense to get a short term lease, rather than buy or stay in a hotel (depending on price, of course). An individual who know that a property of theirs won’t be used for some time can then lease it out to this person. It’s a win-win, as tenants don’t deal with the process of closing or the responsibility of ownership, and the landlord makes some extra cash on the underutilized property.
However, the problem really comes down to when it becomes a business. Companies buy up large quantities of land and property and rent them out, allowing them to shift the costs of mortgage and taxes to the tenant while reaping the benefits of increasing equity. Furthermore, the amount of property for sale decreases, artificially lowering supply for housing to own. This drives up costs. As the company buys up more and more property, they also get to jack up the prices because of their local monopoly. In the individual landlords case, this wouldn’t happen because they have to compete with the rest of the diverse market. So overall, prices go up for housing everywhere.
I see a few paths to a solution.
Limit the number of properties a corporation/individual can lease and/or increase taxes exponentially. This prevents the ability to lease out tons of property, while still allowing businesses to own multiple properties as needed for actual work.
Remove restrictions on single family only housing and residential zoning. This is mainly a US issue, but it would allow for denser housing options, increasing supply in places where that is currently impossible. It would also create more opportunities for economic growth, as placing residencies in areas with businesses reduces demand on cars and makes it easier to network with people.