Home truths — why Cape Town and all other SA cities don’t need a rent control experiment

Cape Town’s housing affordability crisis is real, painful and urgent. Rents are rising faster than incomes, households are under strain and too many people are being priced further from work, opportunity and dignity. On that much, critics of the status quo and the City are aligned.

Where we differ is on diagnosis and therefore on solutions.

Your recent opinion piece arguing that mayor Geordin Hill-Lewis’ case against rent control “falls short” suggests that his position relies on market dogma and an oversimplified supply-and-demand model. In reality, the mayor’s position reflects hard-earned lessons from cities that have tried rent control and experienced severe unintended consequences.

The central mistake in the argument for rent control is the assumption that because rents have not fallen, increased housing supply has failed. In a rapidly growing city like Cape Town, supply does not need to reduce rents to be successful. It needs to prevent them from rising even faster. Over the past few years Cape Town has absorbed tens of thousands of new residents, alongside shrinking household sizes and rising demand for well-located rental stock. In that context, stable or moderately rising rents are not evidence of failure. They are evidence of supply struggling, but at least partially succeeding, to keep pace with exceptional demand.

The article further argues that South Africa’s concentrated economy undermines competition, allowing large developers to manage supply and keep rents high. This conflates development concentration with rental price-setting power. Cape Town’s rental market is not a tight oligopoly. It is made up of thousands of small landlords, sectional title owners, micro-developers, backyard rentals and informal units. Whatever concentration exists in development does not translate into coordinated control over city-wide rental prices.

Crucially, the argument also ignores how housing is financed.

The wellbeing arguments for rent control deserve to be taken seriously, but they are incomplete.

Rent control does not operate in a moral vacuum. It operates inside capital markets. Banks lend against predictable cash flows. The moment future rental income is capped, the risk profile of housing changes. When rent growth is capped below inflation or becomes politically uncertain, net operating income declines in real terms, property values fall and debt service ratios are breached. Projects that once made sense no longer close. Refinancing becomes harder. Small landlords exit first. Maintenance is deferred. New construction slows.

This is not theory. It is precisely what has happened in Berlin, San Francisco and New York. Rent control consistently protects a subset of incumbent tenants while reducing overall supply, degrading housing quality and entrenching inequality between insiders and those trying to enter the city.

The wellbeing arguments for rent control deserve to be taken seriously, but they are incomplete. Moderated rent increases would leave some current tenants with more disposable income in the short term. Over time, however, rent control reduces mobility, locks people into units that no longer match their needs and excludes newcomers such as young households, migrants and lower-income renters without connections or bargaining power. Rent control not only fails. It entrenches inequality.

Rent control is attractive because it promises immediate relief. But cities are systems, not slogans.

Even claims that rent control could reduce traffic by allowing people to live closer to work misunderstand how regulated markets behave. By making existing units artificially valuable to hold on to, rent control reduces turnover. People stay put even when their jobs move, increasing spatial mismatch rather than resolving it.

The real problem in Cape Town is not ideological faith in markets. It is that housing supply cannot respond fast enough to demand. The reasons are well known: slow land release, protracted planning approvals, infrastructure constraints, anti-density rules and bureaucratic delay. In South Africa it can take seven to 18 years to move from identifying land to handing over keys. That is not a market failure. It is a governance failure.

If we are serious about affordability, this is where public anger and moral urgency should be directed. We need to take this fight to politicians and hold them accountable for how they manage public land, public infrastructure and the bureaucracies placed under their control. These are levers of power squarely within the state’s reach, and more particularly, within the direct ambit of Hill-Lewis’s and the mayoral committee’s jobs. The failure to use their governance powers decisively is not inevitable, and it should not be excused by or hidden under symbolic policies that deflect responsibility rather than confront it.

Rent control is attractive because it promises immediate relief. But cities are systems, not slogans. Policies that feel compassionate today can quietly make tomorrow worse. Cape Town, and all other cities in South Africa, do not need a rent control experiment. We need and deserve serious governance that tackles scarcity at its root and delivers more housing to more people. DM

Renier Kriek is an admitted attorney and property finance professional. He is the founder and managing director of Sentinel Homes, a specialist home loan provider focused on expanding access to the formal housing market. He holds the Chartered Banking Professional (SA) designation from the Institute of Bankers.