St. Paul Rent Control and Minneapolis Rent Control: The Actual Rules for 2026

The most damaging myth in Twin Cities real estate investing is that Minneapolis and St. Paul both have rent control. They don't. St. Paul has an active, amended rent stabilization ordinance. Minneapolis authorized rent control via a 2021 ballot measure but has not enacted an ordinance. Confusing the two has caused investors to walk away from viable Minneapolis deals—and caused others to underwrite St. Paul properties without accounting for the 3% cap.

St. Paul: What the Ordinance Actually Says

St. Paul voters passed Ballot Question 1 in November 2021, authorizing a rent stabilization ordinance effective May 1, 2022. In its original form, it was one of the most restrictive rent control measures in the country: a hard 3% annual cap with no vacancy decontrol and no exemption for new construction.

The economic backlash was swift. Housing permits in St. Paul dropped sharply while neighboring Minneapolis saw increased development activity. Developers paused active projects, and multifamily ownership groups reported capital leaving the city. The city council, acknowledging the structural damage to housing supply, enacted a series of amendments over the following years.

What the ordinance looks like in 2026:

• The 3% annual cap remains the baseline for all covered residential units
• Vacancy decontrol (partial): When a tenant vacates for a "just cause" reason—such as non-payment—the landlord may raise rent by CPI plus 8% for the next tenant. This is called the Just Cause Vacancy Exception
• Self-Certification Exception: Increases between 3% and 8% can be approved without full staff review if the landlord submits a Maintenance of Net Operating Income (MNOI) worksheet to the city's Department of Safety and Inspections (DSI) documenting that costs justify the higher increase
• Staff Determination: Increases above 8% require a rigorous manual review. Every rental unit must be deemed safe and habitable to qualify. All documentation of cost increases, capital improvements, and tax increases must be submitted to DSI
• New construction exemption: Properties built within the last 20 years are exempt from the cap. In June 2025, the city permanently exempted all new construction going forward—a significant rollback from the original ordinance

The ordinance covers residential rental units. It does not cover owner-occupied units, units rented for non-residential purposes, or properties subject to certain affordable housing agreements.

The Self-Certification Process: How to Get Above 3%

Most existing St. Paul landlords operating under the 3% cap will need the Self-Certification process to keep pace with operating cost inflation. Here's what that looks like in practice.

The city's DSI website provides the MNOI (Maintenance of Net Operating Income) worksheet. You fill in your property's "Base Year" NOI (typically 2019), then document the specific cost increases driving your need for a higher increase. Eligible justification factors include:

• Documented increases in maintenance or operating expenses
• Property tax increases
• Capital improvements required to bring the property into health and safety code compliance
• Substantial deterioration not attributable to ordinary wear and tear
• Changes in housing services provided to tenants

The completed worksheet is submitted to DSI. The city issues a determination letter and notifies affected tenants by email. For increases between 3% and 8%, the self-certification process is generally faster than full staff review and doesn't require in-person hearings.

For increases above 8%, expect a more intensive process: exhaustive documentation, potential appeals to a hearing officer, and ultimately City Council review if you disagree with the staff determination. Landlords using this pathway for major capital improvement cost recovery should build lead time into their project and rent increase planning.

The practical takeaway for acquisition: when underwriting a St. Paul property with an existing tenancy, your rent growth assumption is 3% per year unless you can document specific cost justification and navigate the exception process. Modeling 4% or 5% rent growth without a plan to support it through the MNOI process is an underwriting error.

Properties Exempt from St. Paul Rent Stabilization

Several categories of property are currently exempt:

• New construction within the last 20 years: Built after approximately 2005, these properties operate at market rents
• Affordable housing: Units subject to regulatory agreements with income and rent restrictions through government programs
• Single-family homes with on-site owner occupancy: Where the owner lives in one unit and rents the other (this varies—confirm with current DSI guidance)

The exemption for new construction is a critical filter when evaluating St. Paul acquisitions. A 2007-built fourplex in St. Paul operates outside the rent cap entirely. A 1965-built sixplex is fully subject to it. The age of the building dramatically changes the underwriting model.

Minneapolis: No Rent Control in 2026

Minneapolis voters passed Ballot Question 3 in November 2021 by a margin of 53% to 47%. The measure authorized the City Council to regulate rents on private residential property. It was a charter amendment, not an ordinance—it granted authority, it didn't enact rules.

As of 2026, the Minneapolis City Council has not passed a rent stabilization ordinance. Landlords in Minneapolis remain legally free to set rents at market rates, subject only to standard statewide notice requirements.

Several early draft proposals circulated at the 3% cap level similar to St. Paul. Political changes on the council and mounting evidence of St. Paul's negative effects on housing development slowed legislative momentum. The threat is not gone—it's a permanent cloud over the Minneapolis market—but it is not active law.

What Minneapolis has done instead is strengthen tenant protections in other areas: extended pre-eviction notice requirements (30 days for non-payment), advancing Just Cause eviction protections, mandatory rental licensing, and rigorous inspection regimes. These regulations add compliance overhead without capping revenue growth.

The investment implication: Minneapolis properties can still achieve market rents and therefore support conventional return modeling, but the psychological overhang of potential future rent control has suppressed valuations in the urban multifamily segment. Sophisticated investors see this as an inefficiency. Risk-averse investors have shifted capital to the suburbs. Both positions are rational depending on your time horizon and tolerance for regulatory risk.

How This Affects Asset Allocation

The bifurcation between St. Paul and Minneapolis is one of the most important analytical distinctions in Twin Cities investing:

St. Paul (rent controlled):

• Higher cap rates reflecting the regulatory risk premium
• Rent growth limited to 3% unless you actively use the exception process
• Operating cost inflation above 3% annually compresses NOI over time
• New construction (post-20 years) is exempt—presents opportunity if you can find it at reasonable prices
• Vacancy decontrol on just-cause turnovers provides partial relief

Minneapolis (not rent controlled, as of 2026):

• Market-rate rent growth, currently tracking 4% to 5% in suburban segments and 2% to 3% in the urban core
• Higher compliance overhead from rental licensing and disclosure requirements
• Future rent control risk that suppresses valuations—creating potential upside if the ordinance threat diminishes
• Eviction timelines and Just Cause protections add operational friction without capping revenue

Suburban Twin Cities (no rent control, no licensing framework):

• Cleanest operating environment
• Rental competitiveness data from 2025 shows lease renewal rates of 63% and average time-to-lease of 38 days—fifth most competitive rental market nationally
• Lower cap rates reflecting the "safety premium"—investors pay up for regulatory simplicity

The Minnesota Investment Property Guide includes a complete analysis of the St. Paul rent stabilization exception process, Minneapolis regulatory compliance, and a side-by-side submarket comparison with cash flow models for each. Get the complete guide.

The Bottom Line

When evaluating any Twin Cities multifamily acquisition, the first question is: which regulatory regime applies? St. Paul with its 3% cap, Minneapolis with no cap but increasing tenant protections, or a suburb with neither? The answer determines your rent growth assumptions, your operating cost sensitivity, and your reserve requirements. Treating the two core cities as interchangeable is the most common—and most costly—mistake Twin Cities investors make.

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