A bill prohibiting certain corporations from buying single-family homes advances at the Capitol
A bill that would prohibit corporate entities, developers and contractors from converting single-family homes into rental property units advanced to the House Judiciary Committee on Wednesday.
The bill aims to increase access to homeownership for families to build equity and wealth through housing by imposing restriction on large-scale investors and corporations that own 10 or more properties. Nonprofits, trusts and builders would be exempt from the requirement.
Author Rep. Esther Abaje, DFL-Minneapolis, said that corporations began entering the single family rental market as a way to stabilize their own portfolios after the 2008 housing market collapse.
“Over time, this has proven detrimental in many parts of the country and here in Minnesota, where individual families are priced out of the buyer market because of all the cash bids that many of these corporations use to purchase large numbers of properties,” Abaje said.
Create a More Connected Minnesota
MPR News is your trusted resource for the news you need. With your support, MPR News brings accessible, courageous journalism and authentic conversation to everyone - free of paywalls and barriers. Your gift makes a difference.
In parts of Minneapolis, specifically Northeast Minneapolis and downtown Minneapolis, investors own more than 30 percent of single-family homes, according to the Federal Reserve Bank of Minnesota. In Fridley and Hopkins, close to 25 percent of single-family houses are owned by an investor.
Abaje said that corporate ownership of single-family homes in Minnesota has doubled since 2006, with these purchases concentrated in Black and brown or low-income neighborhoods.
Advocates for the bill believe that investor-owned properties contribute to the inaccessible cost of homeownership, particularly for first time buyers and members of the BIPOC (Black, Indigenous and people of color) community.
“It’s virtually impossible for new families to compete with the deep pockets of these faceless investors,” said Sen. Liz Boldon, DFL-Rochester, the author of the bill in the Senate. “Single-family homes should not be used as financial assets to increase shareholder value.”
Abaje said that corporate owners can sometimes become absentee landlords, who have limited property management oversight and don’t address repairs in a timely fashion.
“We’ve heard stories from folks that show that the only time you hear from certain corporate landlords is when the rent is due, but never anytime else,” Abaje said. “But by limiting the amount of single-family homes that corporate entities can own, hopefully we can have more homeowners and more people that are present in their communities.”
Five of the 13 members of the House Finance and Policy Committee voted against advancing the bill and raised concerns about property owners being forced into divestment and the displacement of tenants currently living in the rental properties.
“I’m just concerned about the displacement that this may potentially cause as some of these investors are diverted to actually being forced to sell some of their properties,” said Rep. Jeff Dotseth, R-Kettle River. “We may create a problem rather than solve a problem as we move forward here.”
Abaje said a corporation found violating the law would have one year to divest from the property. If the corporation fails to sell the property, it would be sold through the foreclosure process in court. The legislation calls on the attorney general’s office to enforce the ban. For properties that have tenants, tenants would have the first opportunity to purchase the property.