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Whether you may rent out your home in Winona, Minn. is now up to the government.
You need to buy a permit.
But that’s not all. Permits are rationed based on a completely arbitrary percentage. It all depends on when you tried to get a permit and whether you happen to live on a block where other homeowners have already gotten one.
The local government
grants only 30 percent of homeowners
on any block its permission to rent
out their home. Whether someone
gets a permit depends on where they
live. In areas with few renters, some
get new permits. In areas with more
renters — forget about it.
Winona’s rental ban is especially
harmful to property rights, because
the law restricts the percentage
of homeowners that may possess a
permit, not the percentage of homeowners
that may actually rent out
their homes. Some Winona homeowners
possess rental permits but
have never rented out their homes
and have no plans to do so. This
deprives neighbors on the same block
of the ability to rent out their homes
when they genuinely need to do so.
Some owners of hard-to-sell
Winona homes want to rent them to
help make the mortgage payments.
Because the city will not allow that,
some of them face foreclosure.
In addition, being able to rent a
home increases its value, but
Winona’s law undermines property
values at a time when property values
are already falling.
The case has national implications
for property rights, because it
seeks to answer an important constitutional
question: May the government
arbitrarily restrict the property
rights of some but not others?
So far, rental bans like
Winona’s are unique to Minnesota,
existing only in the cities of Winona,
Mankato, Northfield and West St.
Paul. Rental bans, however, are
spreading quickly. Stopping their
spread in their infancy would be a
major victory for property rights
and show cities nationwide that they
cannot exercise their zoning power
to unconstitutionally limit the rights
of homeowners.
