This argument is weak for relying on additional factors, and still doesn't make the case it intends. The hypothetical not only bans renting but also mortgages,

This argument is weak for relying on additional factors, and still doesn't make the case it intends. The hypothetical not only bans renting but also mortgages, which is an artificial constraint introduced to make the case stronger. One could, of course, ban renting without also banning mortgages. But even then the argument is insufficient to answer the original claims. Even if we grant that there is a non-zero value in the timing flexibility provided by use of capital, how does this argument answer the claim that the profits flowing to investors are outsized, distorting the housing market? In other words, short of banning renting entirely, one might propose a tight cap on renting profits, putting returns more in line with other investment opportunities. This argument doesn't address that possibility. (And yes, I know some landlords struggle to make any profits at all. This is not the win people who bring it up seem to think it is, because it suggests that some people are distorting real estate markets for no gain at all!)