Cities should think twice before imposing rental restrictions
As of this week, property owners in some parts of West St. Paul will not have the option to rent out their homes. Under a new ordinance that went into effect Jan. 1, the city is limiting rentals to prevent an increase in the number of run-down, poorly maintained properties.
But while the city’s objectives are understandable, municipal officials overreach in restricting property rights in this way. In an already difficult housing market, capping rentals could also produce unintended consequences such as more vacant buildings and even fewer home sales.
Even as West St. Paul implements its rental cap, a court challenge to such policies is pending in another Minnesota town.
Homeowners in Winona are challenging an ordinance there that caps rentals at 30 percent, arguing that it is an improper government infringement of their property rights. Winona is one of several college towns with rental restrictions, also including Mankato and Northfield.
West St. Paul has compelling reasons to try to limit rental properties. With the continuing foreclosure crisis, city officials worry about empty houses turning into rundown rentals, so they adopted an ordinance designed to keep the city’s 40 percent rental rate from rising.
The effort is intended to help stabilize neighborhoods and protect property values for single-family homeowners.
The three plaintiffs in the Winona case make strong arguments about how rental restrictions can put homeowners who need to rent in a bind. One cannot sell a home because potential buyers know it cannot be rented out.
Another has been unable to sell because of the difficult market and is prohibited by the ordinance from renting the property despite spending $30,000 upgrading it for that purpose.
A better way to maintain property values is to ensure quality rentals by setting and enforcing strong housing codes. Owners who become landlords should be required to keep their buildings up, screen their renters and make sure they don’t create nuisance properties.
— The Minneapolis Star Tribune