Senate Advances Housing Bill Amid Controversial Provisions
The Senate is on the verge of advancing a significant housing policy aimed at enhancing affordability, although a controversial provision favored by former President Trump—a ban on institutional investors from buying single-family homes—has sparked considerable debate.
On Wednesday, lawmakers passed another procedural step for the bill, with a final vote expected before their departure from Washington on Thursday.
The 21st Century Housing Act, which passed the House last month with a strong bipartisan vote of 390-9, features a variety of measures intended to boost the availability of affordable housing.
Senators Tim Scott (R-S.C.), who chairs the Senate Banking, Housing, and Urban Affairs Committee, and Elizabeth Warren (D-Mass.), the leading Democrat, collaborated to refine and promote the legislation in the Senate.
Scott remarked on CNBC’s “Squawk Box,” noting the significance of unity on such housing legislation, saying, “When the president, Elizabeth Warren, and Senate Republicans can find common ground, it shows that focusing on what truly affects Americans can yield results.”
Initially, the law was designed to assist first-time homebuyers and low-income individuals in entering the housing market. However, it excluded a key demand from Trump, which was the restriction on large entities like hedge funds from purchasing single-family homes. Earlier this year, Trump had issued an executive order to address this issue and urged Congress to solidify it during his State of the Union address.
“I’m asking Congress to make that ban permanent, because homes for people, that’s what we really want,” Trump stated. “We want homes for people, not businesses.”
In response, Scott and Warren have incorporated this provision into the bill. If successful, this legislation would also integrate aspects from a previously stalled housing proposal known as the ROAD to Housing Act. The proposed regulations would limit large investors’ ability to buy single-family homes and mandate that those owning over a specific number of properties sell within seven years.
However, the institutional investor ban has raised eyebrows among some Senate Democrats and industry watchers, with concerns it might jeopardize the concept of build-to-rent housing. Senator Brian Schatz (D-Hawaii) highlighted issues with the bill on the Senate floor, arguing that the ban could unfairly impact those with significant rental holdings.
He expressed skepticism about the rationale behind this provision, stating, “There’s literally no reason for this,” and criticized its drafting as flawed in targeting hedge funds. Schatz pointed out that the classification of an institutional investor includes anyone operating 350 or more rental properties, calling it excessive.
Moreover, several housing and rental industry representatives conveyed their worries in a letter to Scott and Warren, asserting that the seven-year requirement could stifle build-to-rent development, ultimately leading to reduced supply and fewer options for renters.
