Back on January 7, President Donald Trump announced that: “I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it.” Soon after, on March 10, the U.S. Senate passed an updated text for the 21st Century ROAD to Housing Act, which would ban large institutional investors from purchasing additional single-family homes. Institutional SFR landlords—defined by the bill as entities that control 350 or more single-family homes—would be allowed to keep the homes they already own. The bill would still allow institutional landlords to acquire single-family rentals through two main exemptions—build-to-rent (BTR) or properties requiring major renovations.
That said, single-family rentals acquired by “institutional” firms through the exemptions would have to be sold to homeowners after seven years. Some in the industry argue that the seven-year selloff rule could effectively halt buying through the exemptions.
Indeed, a bipartisan letter signed Wednesday by 76 members of Congress (38 Republicans and 38 Democrats) pushes back on portions of the Senate’s housing reform package—specifically provisions targeting institutional ownership of single-family rentals. The letter, led by members of the Build America Caucus, warns that proposed restrictions on build-to-rent (BTR) activity and investor participation could unintentionally reduce housing supply at a time when affordability remains strained. These lawmakers argue that BTR has become an important source of new housing production, particularly in high-growth markets, and caution that limiting this channel could result in fewer homes being built and higher rents for tenants. The letter calls for revisions to ensure policies do not “undermine housing production” or discourage capital formation in residential development.
“By applying a mandatory seven-year divestiture requirements and sweeping definitions of “purchase” and “investment control,” Section 901 would effectively halt the production of Build- to-Rent (BTR) housing nationwide and eliminate hundreds of thousands of future units. Industry experts warn that these provisions would not redirect these homes to ownership opportunities; instead, they would simply prevent them from being built at all, worsening the housing shortage and undermining the bipartisan supply-side reforms included elsewhere in the legislation.”
“First, the Senate language would directly constrain housing supply at a time when the United States faces a significant housing supply shortage. According to the Urban Institute this provision could ‘decrease the number of rental units built each year by at least 72,000.’ Policies restricting investment in rental housing, particularly BTR communities, would reduce the production of new housing units that would not otherwise be built. Industry stakeholders have made clear that BTR housing is a critical and growing segment of the housing market, delivering tens of thousands of new units annually and helping meet demand in high-opportunity communities. Limiting this form of development would exacerbate the existing housing deficit and undermine broader efforts within the bill to increase supply.”
Not long after the updated Senate bill language was published—incorporating the institutional homebuying ban—a number of housing industry groups, including the National Association of Home Builders [NAHB], as well as pro-building groups (so-called YIMBY groups), withdrew their support for the housing bill. The reason? Many cited that there was no true build-to-rent exemption. While institutional landlords—those owning at least 350 homes—could still build or buy rentals that qualify as “build-to-rent” after the bill is signed into law, they would have to sell those future build-to-rent homes after seven years. Some analysts argue that requirement could effectively curtail many future build-to-rent projects and even negatively impact housing supply growth.