Institutional Investor Ban on Single-Family Home Purchases Likely to Pass the Senate

This week, the Senate is expected to vote on the Renewing Opportunity in the American Dream (ROAD) to Housing Act. That bill repurposes and redesigns a number of housing programs and has previously had strong support in the Senate. Yesterday evening, the Senate voted 84-6 to advance the legislation. The revised text of the legislation included language (Section 901) that will prohibit large “institutional investors” from purchasing certain single-family homes.

Below are more details on the proposal and analysis of the bill’s path to becoming law.

Legislative Background and Analysis

The legislation defines “large institutional investor” as any entity that (as of the date of the law’s enactment) has investment control of at least 350 single-family homes. This is higher than the White House’s original proposal of 100 single-family homes. The White House issued a Statement of Administration Policy indicating strong support for the bill as written.

Republican Senator Thom Tillis (R-NC), who voted to advance the bill, told reporters on Tuesday afternoon that he does not support the provision and is going to try and remove it from the final bill.

However, we expect given the bipartisan nature of the bill, coupled with the White House’s support, the provision will pass this week.

The Senate can vote as early as Wednesday to pass the bill. The House passed its own housing reform package at the end of the last year, but it did not include any language banning institutional investors from purchasing single-family homes. House Financial Services Republicans are reportedly working to add a provision, and Chair French Hill (R-AR) was complimentary of the Senate, while saying he'd wait to see what the final bill looks like and suggesting it would come down to the definitions. There has been more skepticism from House Republicans than in the Senate (see below). However, the inclusion of a provision to halt the issuance of central bank digital currency (CBDC), which is strongly supported by House Republicans, could be an effort to secure more support even in light of any concerns related to the institutional investor provision.

After Senate passage, conferees will likely be named from both the House and Senate to hammer out a conferred version of the bill, where the fate of the ban will ultimately be decided. It will be important to see if House Speaker Mike Johnson (R-LA) or other leaders will stand up against this as a firewall. 

If House conferees oppose the measure, it could still be removed from a final version of the bill or delay consideration. Whether there will be substantial resistance from House conservatives is yet to be seen. 

Summary of the Provision

Sec. 901 of the bill deals with the institutional investor ban on purchases of single-family homes. 

• “Large institutional investor” is defined as an investment fund, corporation, general or limited partnership, limited liability company, joint venture, association, or other for-profit entity that is engaged in the business of investing in, owning, renting, managing, or holding single-family homes AND after the date of enactment, has investment control of at least 350 single-family homes (not including any that would be counted under the excepted provisions).

• Exceptions

• Any purchase of a single-family home in connection with a restructuring or other reorganization of ownership of single-family homes that were owned or purchased before enactment

• Excepted purchases include:

• Newly constructed, renovated, or a rental conversion for sale and not as a residence rented pending sale

• Build-to-rent programs where the investor purchases newly constructed homes to be managed as rental properties

• Renovate-to-rent programs that substantially rehabilitate single-family homes, making improvements of at least 15% of the purchase price of the home

• Certain homeownership programs, including those that receive meaningful financial support from the investor, including price concessions, for the purchase of the home by a renter

• Programs boosting homeownership, including positive reporting of rental payments to consumer reporting agencies, right of first refusal and a 30-day first look period, and price concessions

• Made in connection with the satisfying of debts previously contracted in good faith

• Undertaken by a mortgage servicer or lender for the purpose of loss mitigation

• From other large institutional investors that owned the home prior to the bill’s passage or purchased in compliance with the law

• From an investor not covered (i.e., one owning less than 350 homes), within two years of the effective date

• Newly constructed, renovated or rental conversion intended to be for individuals age 55 and older

• Single-family homes are defined as those containing two or fewer dwellings, and do not include manufactured homes

• The Department of Housing and Urban Development, Federal Housing Finance Agency, Securities and Exchange Commission, and the Department of the Treasury may issue regulations to minimize market disruption, negative impacts on consumers, or further clarify some of the definitions in the law

Republican Response

Prior to the release of the new text, a number of Republicans expressed concern or have declined to commit to a position on the proposed ban. House Financial Services Committee members Troy Downing (R-MT) and Scott Perry (R-PA) have both expressed skepticism, while others have suggested that the proposal does not have enough support to include in a larger package. Committee Member Senator Pete Ricketts (R-NE) has said that Congress must consider the implications after reviewing the details.

Senator Bernie Moreno (R-OH) also indicated he might introduce legislation to codify the executive order, including the White House’s proposed 100 homes limit. Reports indicate a discussion draft from the Senator includes language that would preempt state regulation that might be even more stringent.

However, Republicans have also said that if the President were to demand support for his proposal in order to sign the larger housing reforms the House and Senate are working to finalize, they might be more willing to find a path forward. 

Democratic Response

The policy itself is much more in line with Democrats’ playbook than Republicans, although some Democrats favor harsher restrictions and believe Republican proposals contain too many exceptions and loopholes. Senator Warren’s endorsement of the Senate bill, however, will likely go far in convincing her colleagues to support. 

Pending Legislation

There are a number of pending bills in the House and Senate to address the issue of institutional investor home purchases, and could ultimately factor in to a final provision during negotiations. Some of the most recent efforts are summarized below:

The Homes for American Families Act 

• Bipartisan Senate bill sponsored by Senator Jeff Merkley (D-OR) and Senator Josh Hawley (R-MO).

• The short bill uses anti-monopoly statutes to implement a new ban on large investors from purchasing a single-family home, condominium, or townhouse.

• The bill stipulates that the purchase of such property by a covered entity would be regarded as restraint of trade prohibited under 15 U.S.C 1 of federal law.

• Right now, it appears that Hawley is the only Republican co-sponsor. 

The American Homeownership Act

• Democratic bill introduced by Senators Merkley and Elizabeth Warren (D-MA).

• The bill is not an outright ban on ownership of single-family homes by institutional investors, rather it removes the tax deductibility of interest paid on residential or rental property owned by institutional investors (description on page 10 of the bill).

• Would apply to owners of 50 or more homes.

• Tax generated from the bill would go into federal housing construction programs. 

• This bill would be under the jurisdiction of the Ways and Means/Finance Committee rather than Financial Services/Banking. 

• The bill has a lot of exceptions for certain kinds of homes including new homes built in the last five years.

• It is far less restrictive than the ban announced by Trump and would, at first glance, make it seem more realistic to pass. 

HOPE (Humans over Private Equity) for Homeownership Act

• Senator Merkley (D-OR) also dropped another bill with a House co-sponsor, Representative Adam Smith (D-WA).

• Senator Hawley is not signed onto this bill for unknown reasons. 

• Since the bill is currently Democrats only right now it is less likely to get a full hearing or floor vote soon (as is the same with The American Homeownership Act).

• The HOPE for Homeownership Act puts a 15% penalty on any new residential home purchase by a “hedge fund.” Below is how that is defined:

"For purposes of this section, the term ‘hedge fund taxpayer’ means, with respect to any taxable year, any applicable taxpayer which has $50,000,000 or more in net value or assets under management on any day during the taxable year.” 

• This bill was also referred to the House Ways and Means Committee. 

• The combination of cosponsors indicates this is not a serious legislative effort under the current Congress.

• House Ways and Means Committee Chair Jason Smith (R-MO) has been consistently adverse to legislation that would increase taxes or costs for American businesses and we believe he would be against these bills coming through his committee.

American Family Housing Act

• Representative Mary Miller (R-IL) introduced legislation that would apply to companies with more than $100 billion in assets.

• It directs the Securities and Exchange Commission (SEC) to monitor and enforce restrictions.

• Would apply only to future home purchases. 

• As of March 2, the bill has five cosponsors, all Republican.

Key Players

• Senate Banking Committee Chair Tim Scott (R-SC)

• Senate Banking Committee Ranking Member Elizabeth Warren (D-MA)

• Senator Josh Hawley (R-MO)

• Senator Bernie Moreno (R-OH)

• Senator Jeff Merkley (D-OR)

• House Financial Services Committee Chair French Hill (R-AR)

Timeline

January 20, 2026: The President signed an executive order stating it is the policy of the administration that large institutional investors should not buy single-family homes that could otherwise be purchased by American families.

• The order also directed that the Secretary of the Treasury develop definitions of both “large institutional investors” and “single-family homes” within 30 days.

• Additionally, the Secretaries of Agriculture, Housing and Urban Development, Veterans Affairs, and the Administrator of General Services and Director of the Federal Housing Agency are directed to issue guidance to prevent government agencies from "providing for, approving, insuring, guaranteeing, securitizing, or facilitating” large institutional investors purchasing single-family homes, but will include “narrowly tailored exceptions for build-to-rent properties” as appropriate. This guidance is due within 60 days.

• White House staff is also directed to prepare a legislative recommendation to codify this policy.

February 19, 2026: A report from The Wall Street Journal states that a memo was sent from the White House to House and Senate committee leaders regarding legislation to codify the President’s order. The memo reportedly proposed banning investors with more than 100 single-family homes from purchasing any additional homes. 

The same report indicated that the White House hoped that legislative language will be added to an amendment to housing legislation. The White House is hoping to add the language to the Senate bill, after recently passed legislation in the House did not include the provision. 

February 24, 2026: The President called on Congress to codify a ban on institutional investors purchasing single-family homes during his State of the Union Address. 

March 2, 2026: The Senate introduced a new version of the ROAD to Housing Act including an institutional investor ban on purchases of single-family homes, applying to those owning 350 or more homes.