Congress Pushes Back on Trump’s Institutional Investor Ban in Landmark Housing Bill

Dozens of members of Congress say they don't support a proposed ban on institutional investors, a bipartisan statement that spells trouble for the controversial idea.

Seventy-six members of Congress—members of the Real Estate Caucus and the Build America Caucus—signed a letter to House Speaker Rep. Mike Johnson calling for major revisions or repeal of the language that would ban institutional investors from owning more than 350 single-family homes.

That language was passed in the Senate version of the 21st Century Road to Housing Act. It's the most comprehensive housing reform bill in decades. But since the House passed its own version of the bill without the ban, the two versions must be reconciled before the bill becomes law.

The letter calls for Johnson to "strip or substantially revise these harmful provisions" of the bill. A growing number of lawmakers are already urging a conference in order to advance the measure.

"While we applaud the Senate's efforts to promote homeownership, a key plank of the American Dream, Section 901 would decrease the housing supply and harm Americans," the letter states. "We urge you to ensure Section 901 is modified to remove provisions that are harmful to increasing the supply of affordable housing."

Investor ban language

Constraints on institutional investors in the housing market are broadly popular. About 76% of Americans believe investors are driving up housing costs, according to data from The Harris Poll.

President Donald Trump has been a proponent of putting limits on investors, and he called on Congress to codify a ban, which is contained in Section 901 of the Senate bill.

But real estate groups worry about Section 901's requirement that build-for-rent developers sell their homes after seven years. Supporters of Section 901 say that language prevents investors from holding permanent rental communities. Real estate groups say such a move would discourage them from building housing entirely.

The House members in the letter represent a major obstacle to the language. Build America Caucus Co-Chair Celeste Maloy, a Republican from Utah, worried about downstream effects.

"By effectively banning build-to-rent housing, Section 901 will force working families to limit family size and place home ownership further out of reach," Maloy said. "After decades of inaction, our solution to the nationwide housing shortage cannot be a bill that further limits housing supply."

Indeed, The Harris Poll data found a segment of Americans who say they are putting life milestones on hold because of high housing costs.

Scrutinizing the investor role

The Mortgage Bankers Association and the National Association of Homebuilders publicly oppose the ban. The Urban Institute found these institutional investors contribute about 72,000 units a year.

At a time when the U.S. housing market is millions of units short of meeting demand, the bill must increase housing supply, said Build America Caucus Chair Rep. Josh Harder, a California Democrat.

Lawmakers put forth a few ideas of how to ban investors. And they've come up with a few theories on which ones are harming the market, and whether limits should apply to those who own as few as 50 homes.

Realtor.com® analysis shows the largest investors own a very small share of the housing market, but they are concentrated in some cities. Meanwhile, mom-and-pop small investors collectively buy far more real estate, even if each owner only has a few houses.

"We applaud these representatives for calling out the unintended consequences of this mandate on much-needed housing options, and refocusing Congress on policies that increase supply, lower costs, and expand opportunity," NAHB Chair Bill Owens said.