What would be the (say 3) biggest hurdles you see to kicking off that type of venture (and maybe give us hints as to how a freer market minimizes those)?

One would be the non-standard equity breakdown which might make getting a mortgage loan from a bank more difficult.

Another would be keeping people 'in the system' long-term, otherwise it doesn't really work (if the original landlord tires of it, what stops them from 'just reverting' to the old system?)

It's an interesting idea, but it'd be hard to test out.

> from a bank

There are multitudes of banks with different policies. There are multitudes of other ways to get capital. In the D community, we used Kickstarter to fund the first D conference, for example.

> what stops them

That's what contracts are for. Contracts are a central feature of a free market.

> Contracts are a central feature of a free market.

So, you don't think that it's a hurdle that your rent has to be split 20% to the previous tenant, 10% to the tenant before that, 15% to the tenant before that, 8% to the tenant before that, 33% to the tenant before that, and 20% to the tenant before that? Who is doing the legwork in tracking these tenants down? What happens when the combined 'equity' goes over 100%? When does the landlord bug out? Who wants to keep tabs on their 8% equity of a rental home that they occupied for a year five years ago, along with paying 8% of the upkeep for any repairs or administrative work? Who wants to chase up all the previous tenants and get them to cough up the money? How much time does that person waste if even one previous tenant won't pay (or can't)? If the original owner wants to sell the property, what happens to the tenants with equity? What if they have more equity than the original owner, can they force the owner not to sell? Can they force the owner to a reserve price? Does a new tenant have to make a contract with the owner and all previous tenants? Is there a new kind of corporate body to handle this new form of renting? Are the contracts around this new way of renting going to be easy enough for the general public to understand, or are they going to provide plenty of loopholes for sharks to operate?

I think that's enough to classify as 'a hurdle', and people need to be in the system long-term and at scale to figure out how it's going to work well. Hand-waving that problem away with "meh, contracts" doesn't solve the long-term issues.

None of those are barriers that the free market or the government throws in your path. For an unusual business plan, expect to have to put in the work to figure out the details.

The original question was "what are some hurdles to doing this?", with a secondary "how does the free market help solve them?". It wasn't "how does the free market (or government) stop you from doing this?".

It's free enough in the US to do all these things. As I said, there have been many communes in the US.