Do rental limits on homeowners harm the poor, middle class and minorities?

Property rights proponents are two-for-two so far this year in contesting proposed ordinances in Twin Cities suburbs that wanted to make it illegal for many homeowners to rent out their houses.  The rejection of a rental cap in Brooklyn Center this week represents a big win for the property rights that undergird our economic liberty, as I wrote here.

Yet it’s also a victory for renters and tenants in Brooklyn Center and beyond. They already face record high rent bills and a shortage of available rental housing that would have further priced them out of the market by limiting the overall number of rental properties and driving up rents.

It’s a real life example that illustrates one of our themes this year at American Experiment: How liberal policies hurt the middle class, the poor and minorities. At least that’s what the supervising attorney for the Mid-Minnesota Legal Aid office, Lael Robertson, told city councilors in a letter hinting at potential litigation.

I am concerned that this ordinance may create an adverse disparate impact on members of protected classes, specifically immigrant populations, people of color and families with children.

Statistics show us that people of color in Minnesota are, by in large, renters. In February, the Minnesota State Demographic Center reported that minorities in Minnesota, in general, are more likely to rent than own homes.  92% of Somali households rent; over 75% of African Americans rent; 57% of Mexican Americans rent; 52% of Hmong households rent.

Some 1,435 low income minority renter households in the first-ring suburb already spend more on rent than their budgets allow or need more space for their families, according to HUD statistics cited by Robertson. Under the rental restrictions on property owners, Legal Aid says the predicament of minority and poor families would only get worse.

Moreover, single family rentals are often the best option for households with minor children and larger families.  There is a lack of affordable housing for larger households, and often single family homes are the only suitable choice.  Limiting the number of single family rental homes will disproportionately affect people based on familial status.

Other opponents pointed out that the proposed ordinance would also have sent a disturbing message.  Realtor Scott Ficek put it this way on the Rental Management Guys website.

It is ultimately discriminatory saying that the City of Brooklyn Center doesn’t want you unless you make enough money and have good enough credit to purchase a home.  This philosophy is discriminatory, and ultimately disproportionately harms single parents, non-whites and new Americans, and those of lower incomes, who are all more often renters than homeowners.

Read my complete News Alert on the latest Minnesota city to turn down rent caps here.