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Concerning real estate law, private property rights, and related matters with a focus on Colorado

The End of “U+2”

Colorado Does Away with "Family-based" Occupancy Limits for Housing

On Monday, April 15, 2024, Governor Polis signed House Bill 24-1007 (HB 24-1007). This new law prohibits local governments from imposing occupancy limits on housing based on familial relationships.

To see the full act, click below:

Now, local governments in Colorado can only limit the occupancy of housing stock based on health and safety concerns. This means the end of municipalities’ efforts to impose a hard limit on the number of “roommates” in a house. For example, Fort Collins has (had) a “U+2” rule, meaning that a maximum of three unrelated adults can live together in a housing unit. The rule is intended to prevent single-family neighborhoods near Colorado State University from being overrun by college students and preserve their character as such. Governor Polis eagerly signed HB 24-1007 as part of his efforts to make housing more affordable in Colorado. Theoretically, the new law will increase available housing stock by doing away with alleged arbitrary limits on occupancy.

This new law has clear winners and losers. Landlords stand to gain, specifically those who own larger houses in cities like Boulder and Fort Collins where the occupancy limits are going away. Now, there is nothing stopping a landlord from renting a four-bedroom house to six (or more?) college students, and therefore make more money. Renters will benefit as well with the increased housing stock available. For ordinary homeowners, I think the results are mixed. The value of single-family homes that are now liberated from the occupancy limits will go up, because the highest and best use of homes near CSU and CU will be high-density student housing rather than single-family housing. This means a potential increase in wealth for such owners. However, there probably will be negative impacts to these neighborhoods that rules like “U+2” meant to prevent. It will also become harder for ordinary, non-investor people to buy a house for themselves to live in near CSU or CU. This is because prices will go up, and such buyers will be competing against the investors who plan on renting to six college students. So, this is a win for private property rights, but will have some side effects.