HOUSE UPDATES INSTITUTIONAL INVESTOR PROVISION IN BIPARTISAN HOUSING BILL

The push to do so has gotten a lot of attention in recent months, particularly after Trump mentioned the effort during his annual State of the Union address.

Trump announced the proposed ban earlier this year and later signed an executive order intended to effectuate it in part. But the administration’s goal has always been to have Congress pass such a restriction into law.

“I’m asking Congress to make that ban permanent, because all this for, people, really, that’s what we want,” the president said during his speech. “We want homes for people, not for corporations. Corporations are doing just fine.”

The crux of the debate

Essentially, major investment firms are going in and buying existing homes on the market and then renting them out to tenants to turn a profit. The bipartisan housing legislation would ban that practice for the biggest investors, while still allowing build-to-rent investment.

Proponents of banning firms such as Blackstone from buying single-family homes, many of whom are on the Left and populist Right, argue that investors are crowding out the market for homebuyers.

While such purchases make up a small percentage of the country’s total housing stock, in some metro areas, the share is much higher. Those are the areas that proponents of such a ban point to when they talk about Wall Street competing with Main Street to buy housing.

Laurel Kilgour at the American Economic Liberties Project told the Washington Examiner that there are problems for tenants who rent from these big firms as well.

“There’s also been a variety of research on the tenant side as well, in terms of increased likelihood of evicting people, hiking rents,” Kilgour said.

She also said there has been research that indicates institutional investors tend to be more aggressive about challenging their tax assessment, which can lower tax revenue for communities to spend on things such as schools and infrastructure.

Others in the housing space, though, say that is not the case and that the policy could backfire by making housing more expensive for some.

“It won’t get to the root of the government-induced housing shortage,” John Berlau, a senior fellow and director of finance policy at the libertarian Competitive Enterprise Institute, told the Washington Examiner. “It will make things worse.”

Critics of the proposal make the points that these institutional investors only purchase a tiny percentage of the total housing stock and that they might make it easier for people to rent homes that they might not have been able to receive a mortgage to buy.

There was also a since-nixed provision in the 21st Century ROAD to Housing Act that would have required investors in build-to-rent homes to sell those houses within seven years. Critics of that argued its inclusion would have done the opposite of boosting housing supply.

Sharon Wilson Geno, president of the National Multifamily Housing Council, said if that were in the bill, it would dramatically reduce investment in build-to-rent housing.

“So it would mean less supply, not more supply, and what is the bill supposed to do? It is supposed to create more supply,” she told the Washington Examiner, “so it really undermined the whole purpose of the bill.”

The history

The debate is not really a long-standing one, as it has only been around for about the past two decades.

Dennis Shea, executive vice president and chairman of the Bipartisan Policy Center’s housing policy center, told the Washington Examiner that prior to the 2008 financial crisis, there was not a lot of institutional investment in the single-family market. But after the crash, things began to change.

“Actually, I think Fannie Mae held an auction for foreclosed properties, which sort of led to the creation of this new industry of institutional investors,” Shea said.

Some proponents of institutional investment also said such investment played a key role in the market’s recovery after 2008.

“Institutional investors, various companies, formed around this idea that we can get these homes, put them back together,” Wilson Geno said.

She said the boost helped people who needed to rent and who might have foreclosed on their homes, saved tax bases for cities and counties, and helped other homeowners avoid decreased property values.

“I think that lesson from 2008 has been lost here, that not everyone is ready and prepared to be a homeowner long term,” Wilson Geno said.

Andrew Justus, a housing policy analyst at the Niskanen Center, said much of the institutional investor activity involves these firms building new homes and then renting them out. Despite that, more of the focus has been on when those firms purchase existing homes.

“And that seems to be what, in particular, has captured the public imagination around institutional investors — is competing head-to-head with people trying to buy existing homes,” Justus told the Washington Examiner.

The scale

Overall, the scale of this purchasing activity by the largest institutional investors is relatively small on a national level, but in some areas, it is much more pronounced. For instance, institutional investors who own 100 or more homes have purchased less than 2% of all homes.

But in places such as Atlanta, that share is much higher. Last year, nearly 10% of homes in the Atlanta metropolitan area were purchased by investors.

“This institutional investor activity is really not a huge part of the single-family market,” Shea said. “It’s concentrated in certain areas of the country, like Atlanta, like the South, the Midwest.”

Shea, citing Realtor.com, said investors with more than 350 home purchases only made up 1% of total single-family home purchases between 2015 and 2025.

Some in the housing space argue it was important for the housing legislation to nix the seven-year build-to-rent divestment provision.

“That’s important from a do-no-harm perspective,” Justus said, “because new-build single-family rentals are, I think, last year 7% of all new single-family homes, and the year before it was 9%, and in a tight market, that’s a source of new supply that I don’t [think] we have the luxury to put in jeopardy.”

Issues and changes to the legislation

The original language in the White House draft defined a “large institutional investor” as any investment fund, corporation, or entity that controls over 100 single-family homes. But in the most recent iteration of the bill, that threshold has been raised to 350.

Ken Wingert, chief advocacy officer at the National Association of Home Builders, said the bill sort of went “sideways” with the seven-year build-to-rent provision that was in the Senate version but was later removed in the House’s latest version. There was fierce pushback from the industry.

“We saw almost an immediate reaction from the market when the Senate passed that provision, in that investors basically put their pens down, locked their wallets up, and said, ‘We’re not touching this right now,’” Wingert told the Washington Examiner.

And the NAHB was one of the groups pushing back the hardest on that provision. Long a supporter of the legislation, it threatened to withdraw support for the bill over the build-to-rent language.

But now that the provision has been removed, industry is largely lining up behind the push.

In a statement after House passage this week, a coalition of groups, including the NAHB and the NMHC, said that while not perfect, it is one the groups can support.

“As the process moves forward, it will be vital that the final language safeguards millions of BTR homes and the individuals and families that are building their lives in them,” the statement reads.

TRUMP BULLISH HOUSING BILL WILL MAKE IT TO HIS DESK

On the other side of the coin, the American Economic Liberties Project, which is highly supportive of the institutional investor ban, also called the bill a “good step,” but hopes the final version is closer to the Senate’s version, which took an even harder line against institutional homebuyers.

“By voting to restrict large institutional investors, and creating pathways to unlock the nation’s housing supply, Congress is starting to put power back in the hands of American homeowners and renters who have suffered from Wall Street greed since the Great Recession caused mass evictions,” the statement reads.