Don’t Buy A Note Or Own A Rental In This Town

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.