Why Namibia Needs to Prioritize Housing Supply Over Rent Control

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The Flawed Logic of Rent Control

Rent control is often presented as a quick fix for rising rent costs, but both basic economic principles and extensive empirical research show that 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 housing units, a proposed rent control bill addresses symptoms rather than root causes.

The priority should be expanding the supply of serviced land and housing, not suppressing prices through administrative measures. Understanding what rent control actually does according to basic economics can shed light on why this approach may be counterproductive.

How Rent Control Affects the Market

In a basic supply-and-demand model, rent acts as the price that balances how many units landlords are willing to supply with how many tenants want to rent. When a government imposes a binding rent ceiling below the market-clearing level, demand increases (because housing becomes cheaper) while supply decreases (because returns to landlords are lower). This leads to a situation where too many renters are competing for too few units, resulting in waiting lists, side payments, and forced limitations on who landlords lease their units to.

Global Evidence on Rent Control

One of the clearest examples comes from San Francisco. A study by Diamond, McQuade, and Qian (2019) found that after the city expanded rent control in 1994, many landlords responded by withdrawing units from the rental market. Some converted flats into private units for sale or redeveloped buildings entirely. The result was a 15% decline in rental supply and a roughly 5% increase in the price of rentals—showing how strict controls push landlords to reduce supply.

A similar pattern appears when rent control is removed. Autor, Palmer, and Pathak (2014) analyzed Cambridge, Massachusetts after strict rent control was abolished. Without price caps, landlords 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 studies reinforce these dynamics. Olsen (1972) and Gyourko & Linneman (1990) showed that tenants in controlled units often occupy more space than they need because 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.

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.

South Africa’s Experience

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.

Namibia’s Real Problem: 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 centers 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 due to the shortage of serviced land.

Why a Namibian Rent Control Bill Is Likely to Backfire

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 prioritize 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. 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

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.
• 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.

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.