The US Senate has overwhelmingly approved a sweeping bipartisan housing bill that aims to make housing more affordable by curbing investors’ outsize influence in housing markets, boosting housing supply, and encouraging financing for first-time homebuyers, among other provisions.
The 21st Century ROAD to Housing Act, which combines regulatory changes, development incentives, and federal program reforms, still must pass the House of Representatives.
The bill’s most notable provision would limit institutional investors from buying more than 350 houses, with violators fined either $1 million or up to triple the excess homes’ purchase prices, whichever is higher.
However, there are some loopholes. The legislation exempts investors buying or developing new homes for rent from the 350-house cap, as long as they sell the homes to individual homeowners after seven years. Corporations that already own 350 or more houses also wouldn’t have to sell any off, although they would be fined for purchasing more.
Atlanta Civic Circle asked an expert on investor homeownership and a housing advocate how much impact the Senate bill could have on housing prices.
Would the bill curb mega-homeownership by investors?
The ban on investors owning more than 350 houses is a big development, but Georgia State University geographer Taylor Shelton said the bill’s carve-outs mean it “won’t have much — if any — impact on the status quo of corporate ownership.”
Shelton, who studies institutional investment in housing, flagged the carve-out allowing companies that already own large portfolios of homes to keep them — instead of being subject to the big new fines if they don’t divest.
“Doing nothing to force divestment is [a] big issue,” he said — a problem shared by legislation before the Georgia General Assembly to rein in large corporate homebuyers.
“Most of the big companies are slowing their acquisition of existing single-family homes and focusing on build-to-rent, so only prohibiting them from future acquisitions of existing homes won’t limit the biggest companies in any way,” Shelton said. It would also “[do] nothing for the thousands and thousands of renters who are currently stuck with these companies due to a lack of meaningful alternatives,” he added.
Another carve-out allows investors to sell excess homes over the 350-home cap to other companies, which also works against limiting corporate mega-homeownership, Shelton said. “The provision exempting sales between corporate landlords essentially guarantees that overall levels of corporate ownership will remain unchanged, with properties just being offloaded from one corporate landlord to another,” he explained.
”We already see that happening quite a bit as some of the bigger players are focused on consolidating their portfolios and emphasizing their new build-to-rent properties,” he added.
“Ironically, the only thing in the ROAD to Housing Act that will actually impact corporate landlord practices is forcing build-to-rent properties to be sold within seven years, which will likely result in those companies just slowing their [built-to-rent] investments — which runs counter to the goal of the legislation to increase the supply of homes nationwide,” Shelton said.
Housing industry criticism
Some housing industry groups also said the provision that allows corporations to build unlimited build-to-rent homes — as long as they sell them off to individual homebuyers after seven years — would discourage new construction.
That “would stall new communities from being built and divert investment away from an important affordable housing option for renters,” said the National Apartment Association and National Multifamily Housing Council in a joint statement.
Could the bill expand housing supply?
The Senate’s housing bill also aims to increase housing supply. One way is by prioritizing housing and community development grants from the US Department of Housing and Urban Development for state and local governments that encourage more dense housing development by revising their land-use policies.
Another is to expand the supply of mobile homes, also known as manufactured homes, by easing federal construction regulations that have historically limited production.
Beth Stephens of Enterprise Community Partners, a national nonprofit focused on increasing housing supply, called the bill a step in the right direction.
She said in an email that the legislation could potentially “strengthen the housing ecosystem by supporting the development of new homes, preserving existing affordable housing, and expanding financing tools that can help more families access stable housing and build wealth through homeownership.”
But one federal bill alone cannot close the housing gap, Stephens added. “The effectiveness of these tools will depend on how states and local communities align land-use policies, streamline development processes, and leverage public and private investment to accelerate housing production,” she said.