House spares BTR from institutional investor ban; plans vote next week

The build-to-rent (BTR) industry, in limbo over the past two months due to legislative uncertainty, could be on the cusp of notching a major legislative win last night. However, the fight on Capitol Hill is far from over. 

The U.S. House of Representatives late Wednesday night released an amended version of the U.S. Senate’s 21st Century ROAD to Housing Act that includes significant carve-outs for build-to-rent and renovate-to-rent developments. It also removed a proposed seven-year sell-off rule for new BTR communities and renovate-to-rent projects. 

Just like the Senate’s version, the House bill would enact a ban on institutional investors that own more than 350 single-family homes from purchasing additional single-family properties. 

However, the House provided noteworthy exemptions to the institutional investor ban that were not included in the Senate version, including:

• any home that “will be newly constructed, renovated for sale or a rental conversion for sale by an owner and not as a residence rented pending sale.”
• any home that is “pursuant to a build-to-rent program where an owner purchases, constructs, or constructs and retains a newly constructed covered single-family home to be managed as a rental property, whether as part of a community made up exclusively of renter-occupied single-family homes or as part of a community made up of single-family homes that are both owner- and renter-occupied.”
• any home that is “pursuant to a renovate-to-rent program that substantially rehabilitates a covered single-family home that does not meet structural or core system elements of local building codes or minimum property standards required for conventional mortgage financing.”

How those new exemptions would play out among build-to-rent developers and investors is spotlighted in a LinkedIn post by rental economist Jay Parsons, whose high-level take is that “Build-to-rent housing would be fully protected under the House’s answer to the Senate’s ROAD to [Less] Housing Act.” A couple of the eight “highlights” Parsons details:

1) “Investors can build or buy any type of new single-family rental housing – including build-to-rent homes in traditional for-sale subdivisions, as well as BTR communities. This would allow homebuilders to continue to do pre-sale agreements with SFR operators, thereby maximizing total supply creation.

2) Investors can buy and rent out homes needing substantial structural repairs, protecting homes that traditional homebuyers are unlikely to buy. Specifically, the bill exempts homes that do not meet local building codes for structural / core systems OR that do not meet standards to qualify for a conventional mortgage. This is critical, as Urban Institute research has documented challenges for individual homebuyers to buy such homes.”

Politico reports that the amended version of the bill is set for a vote on the floor next week before representatives leave Capitol Hill for a Memorial Day recess. 

Legislation in limbo

The House passed its version of the legislation on February 9 by an overwhelming 390-9 margin. The U.S. Senate then, by an 89-10 margin on March 12, passed its version of the bill, which included Section 90. The controversial provision included the institutional investor ban, but didn’t provide any carve-outs for BTR communities, and only limited exemptions for renovate-to-rent projects. 

Section 901 would require new BTR communities—particularly single-family homes and duplexes—to be sold to individual homeowners within seven years of completion. This provision has already frozen capital flow into the BTR sector and significantly constrained new development, industry stakeholders say. 

These provisions targeting BTR received significant pushback in the House, therefore stalling the legislation. In April, 76 representatives, including 38 democrats and 38 republicans, signed a letter urging House leadership to remove Section 901 or make significant changes. With the amended legislation, House leadership seems to have met those members’ demands.

Housing advocates are already signaling their support. 

“The revised House bill makes significant improvements to provisions affecting the build-to-rent sector and institutional investment in single-family housing. The updated language more appropriately targets large-scale acquisition practices while avoiding unintended consequences that could have undermined much-needed housing production and rental supply,” David M. Dworkin, President and CEO of the National Housing Conference, said in a statement. 

“We are pleased that the House is seeking to address the restrictions placed on build-to-rent homes; as we have said before, we need more housing, not less,” the National Rental Home Council said in a statement shared with HousingWire‘s The Builder’s Daily.

What comes next

The House still needs to bring the bill to the floor for a vote. If the House passes the bill, it would then head to the Senate for a vote before heading to the Oval Office. While some Senators have publicly indicated that they support exemptions for BTR projects, the amended legislation’s fate in the upper chamber is not yet clear. 

President Donald Trump, in a Truth Social Post, urged the House on Monday night to pass the Senate’s version of the 21st Century ROAD to Housing Act with an institutional investor ban included. Trump, who has repeatedly stated that he wants to increase homeownership, stated in a speech at Davos in January that “America will not become a nation of renters.”

The House’s amended bill, while providing exemptions for BTR projects, would ban institutional investors from scooping up individual homes, unless they are distressed assets in need of significant renovations. House leadership is betting that their updated version will make the president happy and that it aligns with his pledge that houses are for people, not corporations. 

The House bill explicitly states that it aims to expand homeownership opportunities.

“It is the sense of Congress that this section is intended to expand the number of single-family homes available to individuals for purchase and is aimed at preserving and expanding the supply of single-family homes available to individuals,” the House’s amended bill read. 

However, the legislation also recognizes rental housing as an essential part of the nation’s overall housing supply.

“It is further the sense of Congress that this section is not intended to restrict or interfere with the development of purpose-built rental housing that increases the overall housing supply, including build-to-rent communities, affordable rental housing, and other similar developments that expand housing options for families.”