Africa-Press – Namibia. Rent control is often promoted as a quick fix for high rent costs, but both basic economics and extensive empirical research show it consistently harms the very households it aims to protect.
In Namibia, where the housing crisis stems from a chronic shortage of serviced land and formal units, a rent control bill targets symptoms rather than causes.
The priority should be expanding serviced land and housing supply, not suppressing prices administratively.
What does rent control actually do according to basic economics?
In a basic supply-and-demand model, rent is the price that balances how many units landlords are willing to supply, with how many units tenants want to rent.
If government sets a binding rent ceiling below the market-clearing level, demand rises (because housing is cheaper) while supply falls (because returns to landlords are lower).
The outcome is too many renters chasing too few units, leading to waiting lists, side payments and forced limits on who landlords lease their units out to.
What does global evidence say?
One of the clearest examples comes from San Francisco. Diamond, McQuade and Qian (2019) studied the city’s 1994 expansion of rent control and found that many landlords responded by withdrawing units from the rental market.
They either converted flats into private units for sale or redeveloped the buildings entirely. The result was a 15% decline in rental supply and a roughly 5% increase in the price of rentals: a clear example of how strict controls push landlords to reduce supply.
A similar pattern appears when rent control is removed. Autor, Palmer and Pathak (2014) analysed Cambridge, Massachusetts after strict rent control was abolished.
Without price caps in place, landlords once again invested in maintenance and upgrades, which raised both quality and property values.
These improvements also benefited nearby, never-controlled buildings, demonstrating how a healthier market environment encourages broader investment into housing.
Earlier foundational studies reinforce these dynamics. Olsen (1972) and Gyourko & Linneman (1990) show that tenants in controlled units often occupy more space than they need because the artificially low rent makes it attractive.
At the same time, landlords under-invest in maintenance as they cannot recover costs through regulated rents. Over time, this combination reduces both the quantity and the quality of available housing stock.
Bringing together decades of such evidence, Kholodilin’s 2024 meta-review in the ‘Journal of Housing Economics’ concludes that rent control typically leads to fewer rental units, distorted allocation and diminished mobility, with long-run affordability worsening for future renters.
Short-term gains for a subset of current tenants come at the expense of long-term market health.
South Africa’s historical experience adds a regional parallel. Under the Rent Control Act of 1976, rents on many units were frozen far below market levels.
This gradually eroded incentives for landlords to maintain buildings or invest in new rental supply. Legal reviews later concluded that the system had become distortionary and ineffective.
When rent control was abolished in 1999 and replaced with a more flexible, market-based framework, the objective was to restore investment incentives and improve both the quality and availability of rental housing. The shift reflected a clear recognition that suppressing prices did little to expand supply or address broader affordability.
Taken together, the global and regional evidence tells a consistent story: rent control transfers benefits to some sitting tenants in the short term, but the costs are borne by future renters through tighter supply, worse quality and higher uncontrolled rents.
The policy stabilises a small part of the market while destabilising the market as a whole.
NAMIBIA’S REAL PROBLEM IS A LACK OF SERVICE LAND
Namibia’s own policy documents and official statements are clear that the housing crisis is fundamentally a supply problem, driven by slow and costly delivery of serviced land and limited production of affordable formal housing.
The draft Revised National Housing Policy notes that high housing costs are “due to slow and costly delivery of serviced land and negligible affordable formal housing production”.
The Ministry of Urban and Rural Development’s affordable housing sector brief explicitly states that Namibia faces “a deficit of affordable serviced land and housing” and that limited new property supply in urban centres has led to a sizable shortfall and rising prices.
Various recent estimates put the national housing backlog at roughly 300 000 units, with the National Housing Enterprise indicating that about N$76 billion would be required to close the gap.
In Windhoek alone, the housing backlog has left more than 72 000 households without proper homes, with informal settlements expanding rapidly because of the shortage of serviced land.
In this context, pushing ahead with a rent control bill, as still envisaged in ministerial legislative plans, is a classic case of treating the symptom rather than the cause.
Why a Namibian rent control bill is likely to backfire?
Namibia’s formal rental market is already thin, especially at the affordable end.
Introducing binding rent controls would compress returns and heighten regulatory risk, weakening the commercial rationale for institutional investors, developers and lenders to build or hold rental stock.
In practice, capital would reallocate into owner-occupied units, commercial property or other asset classes, further constraining the supply of formal rentals for low- and middle-income households.
These pressures are amplified by existing structural bottlenecks. Land servicing is already slow, costly and procedurally cumbersome. Adding rent control into an environment with limited serviced land and long approval timelines dilutes incentives for both local authorities and developers to prioritise rental projects.
Rent control systems also impose material administrative and institutional demands. They require functioning rent boards, reliable market data, clear regulatory procedures and effective dispute-resolution mechanisms.
Even advanced jurisdictions struggle to enforce these regimes consistently. As Kholodilin’s review notes, outcomes vary widely, with many systems facing persistent loopholes and legal disputes.
Given Namibia’s already stretched regulatory and judicial capacity, the likely result is a cumbersome system that delivers limited real protection while still discouraging investment.
Most critically, rent control bypasses the segment that constitutes the bulk of Namibia’s housing challenge. More than 60% of the backlog sits in ultra-low-income households that cannot access mortgage finance and do not participate in the formal rental market. Price controls on formal units do nothing for those living in shacks and informal settlements.
What Namibia should focus on instead? Serviced land and housing supply!
If the core issue is a structural shortage of serviced land and affordable formal units, then the policy priority should be to unlock large-scale supply. That means:
Streamlining land delivery: Implement the National Housing Policy’s own recommendations to shorten land approval processes, standardise procedures and deploy digital systems for planning, cadastre and permitting.
Scaling up bulk infrastructure: Use central government and development finance to fund bulk services to new growth areas, so that municipalities can bring serviced plots to market at significantly lower cost and at scale. The existing policy emphasis on upgrading informal settlements and providing basic services is a step in this direction and should be expanded.
Crowding in private and institutional capital: Instead of capping rent costs, government should provide regulatory certainty, serviced land, and possibly well-designed subsidies or guarantees that make affordable rental and ownership projects bankable.
International experience shows that predictable rules and secure property rights are much more effective in mobilising long-term capital for housing.
In conclusion, the economics and the evidence point in the same direction. Rent control may offer short-term relief for some tenants, but it ultimately shrinks rental supply, distorts how housing is allocated and weakens quality, leaving cities less affordable over time.
For Namibia, where the core challenge is a severe shortage of serviced land and formal housing, a rent control bill is a strategic misstep. The issue is not excess demand; it is insufficient supply. The practical response is to unblock land servicing, accelerate housing delivery, create clear incentives for investment and apply targeted support for vulnerable households, rather than trying to fix prices by decree.
*Etuna Hango is an investment professional specialising in infrastructure, agriculture and real-asset development across emerging markets. His work centres on deploying capital into high- impact sectors, shaping investment strategy and evaluating policy environments that influence long-term economic outcomes.
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