Real Estate Lobby Sounds Alarm Over Forced Sale Provision In Housing Bill
More than three dozen commercial real estate industry groups are urging the Senate to reconsider a provision in its housing reform package that they say will decimate build-to-rent construction.
The Mortgage Bankers Association, The Real Estate Roundtable and the National Apartment Association are among the industry groups calling on senators to amend the 21st Century Renewing Opportunity in the American Dream to Housing Act to eliminate a provision requiring large BTR developers to sell any communities within seven years of construction.
The 42 industry groups that signed the letter, 32 of which are affiliated with the YIMBY Action network, say the legislation as written would make new development untenable and strip away the benefits that come with operating at scale and with flexibility.
The industry groups are specifically objecting to Section 901 of the bill, a new addition that says large BTR operators that build or acquire a home “shall dispose of the single-family home to an individual home-buyer not later than 7 years after the date of purchase.”
“It doesn't prohibit it, but it greatly discourages build-to-rent activities,” The Real Estate Roundtable CEO Jeffrey DeBoer told Bisnow in an interview Friday.
“These projects take years to get through the development process, the zoning process, the funding process,” he added. “Requiring any private business or citizen to sell any kind of asset in a certain time is highly unusual, and I think a lot of people would say it's unconstitutional.”
The latest version of the bill, coming from the Senate Banking, Housing and Urban Affairs Committee, passed its first procedural hurdle this month with a bipartisan 84-6 vote.
The letter is addressed to Sens. Elizabeth Warren and Tim Scott, the top officials on the Senate Banking Committee, and the Senate’s majority and minority leaders, Sens. John Thune and Chuck Schumer.
It says the industry groups are “deeply concerned” about the proposal and warn it will have a “chilling effect on the entire BTR supply chain.” Dozens of local organizations from cities across the country signed the letter, along with some of the industry’s leading national lobbying groups.
The Trump administration has honed in on corporate ownership of single-family housing as a factor driving up the cost of living, and the president signed an executive order in January that aimed to stop institutional investors from buying houses.
But the order explicitly included a call to create exemptions for build-to-rent properties that are planned, permitted, financed and constructed as rental communities, which had led BTR operators and investors to largely shrug off the executive order.
A cap on how long an operator can hold a property hadn’t previously been on the radar of BTR advocates, and DeBoer said he suspected that the bill's added provision is the result of negotiations in a closely split Senate chamber.
“This is what some members of the Senate wanted, and it was agreed to go into the bill,” he said. “That doesn’t mean that it will ultimately stay in the bill. But it's in the bill now.”
