State Legislature Proposes Single-Family Investor Limits

In another effort to increase housing supply, the Minnesota House of Representatives Housing Finance and Policy Committee passed a bill that would limit the number of single-family homes a corporate entity or investor group could buy as investment properties.

If passed by the House and Senate, it would cap the number of single-family home rentals a person or company could own at 10. As currently written, those who own more than that would be forced to divest of them. Owners would be required to give tenants the first opportunity to purchase the property.

Alternative proposed methods of enforcement including fines and fees are also being explored.

Housing providers would be able to apply for an exemption if, among other things, they can demonstrate selling the houses would not contribute to the supply of affordable housing in a meaningful way.

Just 3.4% of homes in the seven-county metro area are owned by corporations. Compare that with Atlanta, where investors own 28.6% of all single-family rentals or  Jacksonville, Florida, where they own 24.2%

According to the Minneapolis Federal Reserve, 68.5% of single-family home rentals in the Twin Cities are owned by mom and pop investors.

Four institutional investors own a combined total of 3008 single-family rental properties in the Twin Cities.

A study from the Housing Finance Policy Center of the Urban Institute, found the vast majority of single-family home rentals are found in 20 metropolitan statistical areas (MSAs) in the U.S.  The majority of these are found in warmer climates.

One of the bill’s sponsors, Rep. Esther Agbaje maintains the proposed legislation is meant to prevent Minnesota’s percentages from rising.

From here, House File 685 goes to the House Judiciary Finance and Civil Law Committee. The Senate companion bill, SF 365, and its progress can be tracked here.

Similar legislation has been introduced in the New York state legislature, and the U.S. House of Representatives.

In all cases, these are a long way from passing. As always, be sure to let your representative know how you feel.