House Cuts Build-To-Rent Ban From Latest Bill, Targets Vote Next Week

The build-to-rent industry is on the edge of winning a contentious battle on Capitol Hill that threatened its business model. 

After weeks of debate and deadlock, provisions that would have forced BTR operators to sell properties after seven years of ownership, among other restrictions, have been stripped from an amended version of the 21st Century Road to Housing Act released by senior lawmakers in the House of Representatives late Wednesday. 

House leadership is hoping broad bipartisan support will get the bill through the chamber in a vote next week under suspension of rules, a procedure that limits debate but requires a two-thirds majority to pass, Politico reported. If it wins approval, the compromise bill would still have to go back to the Senate for a final vote.

President Donald Trump put pressure on the House to pass the legislation earlier this week, saying in a social media post that “The American Dream of Homeownership is under attack.”

The BTR restrictions were introduced in the Senate’s version of the bill in March, setting off a furious lobbying effort from both operators and affordable housing advocates who argued an effective ban on the business model would hinder housing supply. 

The addition of the amendments to the bill were enough to stifle activity in the sector in recent months.

The bill cleared the Senate on March 12 and went to the House for approval, but it was frozen on arrival amid lobbying for changes to the restrictions. A bipartisan group of 76 House members said in an April 22 letter to the House majority and minority leaders, Republican Mike Johnson and Democrat Hakeem Jeffries, that they wouldn’t advance the legislation without the BTR restrictions being stripped from the bill.

In its amended form, the bill creates a clear exemption for the BTR sector to continue acquiring and building homes. 

It prohibits large institutional investors, which it defines as firms with at least 350 homes in their portfolio, from directly or indirectly purchasing existing single-family homes, but it narrows the definition of a qualifying property and includes additional exceptions that allow for a broad range of investment activity in single-family housing. 

It defines a single-family home covered under the bill as “a property that contains 2 or fewer dwelling units that are each intended for residential occupancy by a single household.” But it creates exceptions for properties that “when occupied, has always been occupied by a renter” and manufactured homes.

Properties that fail to meet local building codes or the standards for conventional mortgage financing are also exempted from the institutional acquisition ban, provided the buyer brings the home into compliance. Buyers were required to spend at least 15% of the purchase price of the home on renovations under the previous proposal, but that investment floor was removed in the latest round of changes. 

Private equity firms and other investors with large portfolios will be able to continue acquiring some types of housing and the updated bill removes any forced sale provisions and puts no cap on holdings.

The bill explicitly states that nothing in the section related to BTR investment is meant to “require any covered large institutional owner to divest or otherwise sell any covered single-family home purchased before or after the date of enactment.” 

House members also added 12 new community banking provisions that aim to ease the regulatory burden at the same time the Federal Reserve is planning to loosen capital requirements for smaller lenders.

Demand for BTR properties exploded during the pandemic, with construction volume rising 455% from 2019 through 2024. Rental homes accounted for more than 7% of home starts in the year that ended in September, with around 69,000 units under construction.

While lending and acquisitions dropped off as the bill moved through Congress, the major BTR operators have been projecting confidence through the debate. Invitation Homes and AMH, two of the largest operators in the space, spent a combined $554M on stock buybacks in the first quarter and secured authorization from their respective boards for $1.2B in future repurchases.