Minnesota Rent Control Laws in 2024

Rent control policies regulate how much landlords can increase rents on residential properties. At the state level, Minnesota does not have any rent control laws in place that limit rent increases. However, cities and municipalities in Minnesota have certain powers to enact policies related to stabilizing rents and protecting tenants from large rent increases.

Specifically, the cities of Minneapolis and St. Paul have passed local ordinances in recent years establishing rent stabilization programs within their jurisdictions. These policies impose caps on how much landlords can raise rents each year on existing tenants in order to provide more predictability and affordability.

The rent stabilization laws in Minneapolis and St. Paul do not amount to full rent control, since they focus specifically on limiting annual increases versus setting absolute caps on rent levels. However, the policies do aim to curb excessive rent hikes and prevent the most vulnerable residents from being displaced.

While rent stabilization policies have generated controversy, with some arguments that they discourage new housing construction, Minneapolis and St. Paul have determined that regulations on allowable rent increases provide protections for renters without going as far as imposing rigid caps. Their local ordinances represent efforts to balance the interests of landlords and tenants during a period of fast-rising rents in the Twin Cities region.

With rent control prohibited at the state level in Minnesota, cities have opted to enact these more targeted stabilization measures.

Rent Stabilization in Minneapolis

Minneapolis has enacted a rent stabilization ordinance that applies to most rental housing built before 1995. The ordinance limits annual rent increases to 3% plus inflation. This helps protect tenants from large, sudden rent hikes. 

The ordinance allows landlords to apply for exceptions to the 3% limit in certain cases, such as if they have made major capital improvements to the building or need a larger increase to earn a reasonable return on investment. The application process requires documentation and approval by the city, with potential appeals.

The rent stabilization policy aims to improve housing stability and affordability for Minneapolis residents. At the same time, it seeks to balance the needs of property owners to maintain buildings and earn reasonable profits. The city continues to monitor the ordinance's impacts through collecting data, issuing reports, and recommending potential policy tweaks over time.

Rent Stabilization in St. Paul

St. Paul has enacted rent stabilization policies that are similar to Minneapolis but contain some key differences. The St. Paul ordinance applies to most private apartments with 5 or more units in the city. It caps annual rent increases for existing tenants at 3%, unless landlords apply for and receive approval from the city for a larger increase. 

Under the St. Paul rent control law, landlords are required to register the rents they charge with the city when a new tenant moves in. The registration includes details like the monthly rent amount for the unit. Landlords must then get approval from the city for any rent hike above 3% when leasing to the next tenant. There are exceptions allowing larger increases in certain cases, such as significant improvements made to the rental property.

The rent stabilization policies aim to provide more predictable rent increases for tenants in St. Paul's larger apartment buildings. By capping hikes at 3% annually and requiring city approval, sharp or excessive rent increases from one tenant to the next are prevented. However, landlords face some administrative requirements and constraints on their rental income. The city continues to monitor the ordinance's impacts on both renters and landlords.

State Law on Rent Increases

• Minnesota does not have any state-wide laws that limit or cap how much a landlord can raise rents. Landlords can raise rents by any amount and as frequently as they choose.
• The one requirement under Minnesota state law is that landlords must provide proper notice for any rent increases:
• For rent increases of 10% or more, landlords must provide tenants with a written notice 60 days prior to the effective date of the increase.
• For increases less than 10%, a written notice must be provided at least 30 days in advance.
• Beyond the notice requirements, there are no restrictions under Minnesota state law on how often landlords can raise rents. Landlords are permitted to raise rents on an annual basis or more frequently if they choose to do so.
• So while some cities like Minneapolis and St. Paul have enacted rent stabilization policies, at the state level there are currently no limits on the frequency or amount that Minnesota landlords can increase rents each year. Proper notice must be given, but the state places no caps on rent hikes.

Impact on Landlords and Tenants

Impact on Landlords

• Rent stabilization policies aim to prevent dramatic rent spikes that could displace tenants. However, these policies may limit a landlord's income and flexibility when it comes to setting rents. With annual caps on rent increases, landlords have less ability to raise rents to market rates. Their rental revenue growth is restricted.

Impact on Tenants

• For tenants, rent stabilization provides more housing stability and predictability. By capping annual rent increases, these policies prevent the sudden large rent hikes that can force people to move. Tenants are able to better plan their finances and remain in their homes without sharp spikes in housing costs. Rent stabilization aims to provide protections for renters against rapid rent inflation.

Minneapolis Work Group

The Minneapolis Work Group on Affordable Housing was formed in 2017 to study policy options to address the city's growing housing affordability crisis. The work group was comprised of local housing experts, residents, landlords, developers and city officials.  

After reviewing data on rising rents and housing costs, and holding numerous public hearings, the work group recommended that the city implement a residential rent stabilization policy. The work group's findings led the Minneapolis City Council to pass a rent stabilization ordinance in December 2018.

The Minneapolis Work Group continues to play an active role in shaping rent stabilization policies in the city. The work group monitors the implementation of the rent control program, tracks key housing data, and recommends potential updates and improvements to the ordinance. They provide ongoing perspective and feedback to ensure the city's rent stabilization policies meet the needs of both tenants and housing providers.

Saint Paul Work Group  

The Saint Paul Work Group studied potential rent regulation policies in the lead up to the city's rent stabilization ordinance. The work group provided recommendations that helped shape key provisions in the final policy that was approved. 

Ongoing responsibilities of the Saint Paul Work Group include evaluating the effectiveness of the rent stabilization ordinance, monitoring impacts on tenants and landlords, and recommending any changes needed to improve protections and fairness. The work group aims to ensure the policy achieves its goals of maintaining housing stability and affordability for Saint Paul residents.

Maximum Rent Hikes

• There is no state-wide limit on how much landlords can raise rents each year in Minnesota. Landlords have the ability to raise rents as much as the market will bear.
• However, cities in Minnesota do have the authority to impose caps on rent increases through local rent stabilization ordinances. Minneapolis and St. Paul have enacted such policies that limit annual rent hikes.
• In Minneapolis, rent increases are capped at 3% plus inflation each year. Landlords can apply for an exception to charge higher rent increases in certain circumstances, such as making major capital improvements to a building. They have to submit documentation and justification for these larger rent hikes.
• St. Paul also limits rent increases to 3% annually for properties covered by its ordinance. Landlords in St. Paul must register their rental properties and apply to the city for approval before imposing any rent increases.
• So while state law does not impose a maximum limit statewide, cities can establish their own caps on rent increases through local stabilization policies. These ordinances include a process for landlords to apply for exceptions and flexibility when justified.

Required Notices

Landlords in Minnesota must provide proper notice before implementing rent increases for existing tenants. 

If the proposed rent increase is 10% or more compared to the tenant's current rent, the landlord must provide a written notice at least 60 days prior to the effective date of the increase. For increases less than 10%, a 30 day written notice is required.

Notices must be delivered properly to the tenant's unit or mailed to their address via first class mail. The notice should specify the amount of the increase, the new rental amount, and the date it will go into effect.

Landlords are allowed to raise rents as often as annually in Minnesota. However, they must provide a new written notice each time, following the 60 day or 30 day notice rules outlined above based on the percentage increase. Tenants do not need to consent to the increase, but the proper notice must be given.

There are no exceptions to the written notice requirements for rent increases in Minnesota. Landlords must provide 60 days notice for increases of 10% or higher, and 30 days otherwise. This allows tenants time to adjust their budgets or find a new rental if needed.

Impacts on Landlords

Rent stabilization policies that cap annual rent increases can limit the revenue landlords are able to generate from their rental properties. With restrictions on how much rents can be raised each year, landlords may not be able to increase rents sufficiently to keep up with rising expenses, taxes, maintenance costs, and desired profit margins. This can make rental housing less profitable as an investment over time.

However, high tenant turnover also imposes costs on landlords. Having to repeatedly market units, screen new tenants, clean and prepare apartments between tenants, and potentially face periods of vacancy all cut into profits. To the extent that rent stabilization allows more tenants to remain longer in their units, it could provide some savings that offset the lower per-unit revenue.

Rent control laws often allow landlords to apply for exceptions to the caps if they make major capital improvements or upgrades to a building. By investing in renovations, systems upgrades, sustainability improvements, or adding new amenities, landlords can justify larger rent increases above the annual limits. This provides some flexibility and an avenue to boost rents beyond the caps through capital investments. However, the process to apply for exceptions can add administrative hurdles.

Overall, rent stabilization aims to protect tenants from excessive rent hikes. But the limits on annual increases do reduce the income growth potential for rental property owners. Landlords lose some flexibility in setting rents at optimal market prices each year. However, avoiding high turnover costs and options to justify higher rents through capital upgrades help balance these impacts.