Solution.

Personal housing: Instanced.
Free company housing: as is.

The whole thing just feels like they promised more than they can deliver.

Instance personal housing space link it to private rooms make them expandable. Stop using servers space and character data as an excuse. Get better servers give players a experience unlike any other and people will come in droves. Keep telling us your at max capacity 4 hen people won't come and others will leave in frustration.