Arlington, Va.—In one of the greatest housing slumps in our nation’s history, the town of Winona, Minn., is making it that much harder for homeowners to hold onto their investments.
Buying a home is an important and lifelong investment, but circumstances change and selling a home in today’s housing market can be difficult. Instead of selling, many homeowners are renting out their homes. But the city of Winona, Minn., is imposing a ban on the number of homeowners who may rent out their properties, harming both homeowners and renters alike, and making it more likely that those who have invested in homeownership may needlessly lose what they are struggling to own.
Under Winona’s rental ban—locally known as the “30 percent rule”—the government gives only 30 percent of homeowners on any given block permission to rent out their homes. Whether someone gets a license is the luck of the draw. In areas with few renters, some get new licenses. In areas with more renters, no one gets a new license. Not only is this law unwise, it is also unconstitutional. Today, the Institute for Justice, a public interest law firm that fights for property rights nationwide, is teaming up with a group of Winona homeowners to change the law. The lawsuit seeks to answer an important constitutional question: May the government arbitrarily restrict the property rights of some but not others?
“For centuries people have been renting out their home; it is a legitimate part of property ownership.” stated IJ Minnesota attorney Katelynn McBride. “Winona is denying homeowners that right, which violates the Minnesota Constitution’s protections of our fundamental property rights.”
The ban is affecting hundreds of Winona homeowners, like IJ clients Ethan Dean, Holly Richard and Ted and Lauren Dzierzbicki. Each put their homes on the market hoping to sell them, but the economic climate has made it difficult, if not impossible, to sell. They want to rent out their homes to help make the mortgage payments. But because Winona has imposed the rental ban, and they live on blocks where at least 30 percent of the block was granted licenses, they cannot. If Winona does not lift the ban, some of them even face foreclosure.
“Renting out our home poses no health or safety threat nor would it degrade the value of the neighboring properties,” said Ted Dzierbicki. “My wife and I are challenging the law because it is not the government’s place to interfere with a private transaction.”
Anthony Sanders, an IJ Minnesota attorney said, “This law doesn’t just violate homeowners’ right to rent out their property, it also hurts renters because the ban means both fewer places for renters to live and higher rents.”
Winona isn’t the only city in Minnesota to pass rental ban laws. Mankato, Northfield and, more recently, West Saint Paul now forbid many people from renting their homes. So far these laws are unique to Minnesota, but cities in other states may soon follow Minnesota’s lead.