The Senate voted 90-8 to advance its version of a comprehensive housing reform package with provisions from a similar bill the House passed, as well as a prospective ban on institutional investors.
Sens. Elizabeth Warren (D-MA) and Tim Scott (R-SC) revived the chamber’s comprehensive housing package, which has dozens of provisions aimed at easing home construction and making homes easier to buy. This comes a month after the House passed its own Housing for the 21st Century Act.
The Senate previously passed its housing bill, the ROAD to Housing Act. But that bill was halted last year when it was stripped out of the annual Defense budget.
This new bill is a combination of the two, with the “vast majority” of provisions from both the Senate and House bills. It’s appropriately renamed a combination of the two: the 21st Century ROAD to Housing Act. The bill also proposes limits on institutional investors’ ability to buy single-family homes, which was singled out by President Donald Trump in his State of the Union address.
The next step is the reconciliation of the two bills. Scott said he expected a final version of the bill would incorporate 20 to 21 of the provisions in the House bill’s 25 total, as well as 36 of the 40 in the Senate bill.
New clarity on investor ban
The bill’s most significant new language is the new prohibitions for institutional investors in the single-family home market. The bill broadly blocks investors who directly or indirectly own 350 or more homes from making purchases in the market.
Trump signed an executive order that adds new requirements aimed at discouraging institutional investors from purchasing single-family homes. Importantly, it included an exception for build-for-rent communities. This bill adds an exception for “renovate-to-rent.”
This new bill has some provisions that give investors seven years to dispose of some homes. And the renters in those homes would be given a 30-day right of first refusal to purchase the property.
Violators could face a civil penalty of up to $1 million, or three times the purchase price of the property, whichever is greater.
This language has sparked some debate. Jim Baker of the Private Equity Stakeholder Project, a critic of private capital firms, criticizes “major loopholes for private equity and other Wall Street landlords.”
On the other hand, Austin Walker, who owns New York–based real estate fund manager A. Walker & Co., tells Realtor.com® that major real estate investors want certainty. Major funds deploy capital looking for stable and uncomplicated returns.
“Real estate industry folks are looking for stability, clarity, and long-term outlook,” Walker says. “That’s what’ll attract capital to a space where it’s been very tight. And there are many other concerns already slowing down production.”
Specificity in other measures
Experts tell Realtor.com the Senate’s first version of the bill had some provisions that went further than what the House is likely to accept. That means some of these provisions might be argued out in reconciliation.
There are some mandates the Senate wants to fund that the House might not favor, says Frances Torres, director of housing for the Bipartisan Policy Center. For instance, some proposed changes to rental administration, disaster recovery, and an innovation grant program could lead to greater spending.
“There’s a lot of hurdles for them to get through, even with significant bipartisan buy-in,” Torres says.
The bill “incorporates bipartisan housing ideas from the House, and takes a good first step to rein in corporate landlords that are squeezing families out of homeownership,” Warren said in a statement. “Congress should pass this package and continue working on further legislation to combat our nation’s housing crisis.”
Trump has made housing affordability a major aspect of his larger push to tamp down costs this year. But he hasn’t weighed in on the bill in detail. Democrats have unveiled a set of their own competing proposals.
