Local Limits on Rental: Good or Bad?
Right after Christmas, the Star Tribune published an article about West St. Paul's new ordinance to limit the number of rental properties allowed on each block. Today, the lead editorial was on the same issue. West St. Paul is not alone - Winona and Mankato have passed similar measures in their communities. Meant to protect the value of single family homes, the approach is not without considerable controversy. Many argue that it's a fundamental property right for an owner to be able rent out his or her property. Others are concerned about the impact on renters when affordable housing is already in short supply.
See below for some comments made by MHP staff in response to this story. What do you think?Here are a few excerpts from the Strib article, but we encourage you to read the whole thing.
The argument:
West St. Paul officials say they turned to the rental limit to help stabilize neighborhoods and protect property values for single-family homeowners. They say they're trying to keep the city's 40 percent rental rate from rising in the face of a growing tide of foreclosures and vacant houses.
One voice in opposition:
But Rick Duffy, a West St. Paul resident and Realtor who is renting a house in the city with his fiancée, said a cap on rentals may make it hard for retirees to sell homes. And, he said: "It just fundamentally doesn't feel right. I don't think it is a fair statement that renters degrade a neighborhood."
We've asked MHP staff to post their thoughts. Join in this important discussion regarding the place of rental housing in Minnesota communities.
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Comments
We alert him to serious repair issues he would never have known about had the house sat vacant or was filled with negligent people. We've alerted him to squirrels nesting in the eves, cracked & dying trees ready to fall on the house, leaking roof & caved-in ceiling, we shovel (for free), we keep litter picked up out of the yard, etc. We have excellent relationships with our homeowner and renting neighbors alike.
I don't believe we're the minority. I think if a landlord does their job right (at least somewhat, & in the right places), good renters (good PEOPLE, rather) add stability and value to a home & neighborhood.
Currently, Minnesota is in dire need of more quality, affordable housing. In addition, homeowners who are underwater on their mortgages have limited opportunities to sell.
Those who assume that an increase in rental housing will lead to further neighborhood decline, haven't done their homework. In fact, limiting rental housing may have just the opposite effect of what policymakers intended.
Housing researchers and advocates need to help local elected officials understand the potential negative consequences of passing such a policy.
Declining home prices, low vacancy rates, tightening credit markets, stagnant wages, and changing demographics all point to a need for more housing choices-- not fewer.
Restricting the uses of someone’s property changes the value of that property, so it isn’t should not be done lightly in existing neighborhoods.
Leigh do you know of any study with dataont the differencein onwer investment for rental and owner-occpied proerties? At the very least rentals are better than vacancies.
From a housing market perspective, prohibitting rentals might make the housing market “clear” more quickly because owners will be forced to realize losses if they cannot afford to sit on the property. This would bring back a healthy market sooner, but would be very painful in the short term.
Rental vs ownership policy is a complicated thing. You don’t want to encourage a tenant culture like you find in say South America, but you also don’t want to push people into “debt slavery” either because you are so zealous about keeping them out of renting.
My understanding is that while the Mount Laurel decision from New Jersey forbids communities from prohibitting/excluding low income (rental) housing in an area through ordinance, that arbitrarily reasonable caps get around this because it is hard to argue a "no more than 30% rental" ordinance is "exclusionary".
More generally, I think a lot of the negatives from rentals come from the short term rentals where people are only there 3 or 6 months (or less), perhaps a system where you have a 1 year lease minimum would mitigate most of the problems?
The major danger with this kind of policy is that it underscores the perception that rental is bad, and something to be limited if not excluded altogether.
It might be good idea to allow rentals but require fees and inspections (like Minneapolis does) to help ensure that properties are maintained.
Also, a trigger could be set up, so that owners can rent when the vacancy rate exceeds a certain percent or when foreclosures are high (this is more a homeowner protection, allowing renting when there is a bad market).
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