By Joe Light
A bill passed by the Senate last week seeks to ban institutional investors such as Blackstone or Invitation Homes from buying up single-family homes to rent out. The bill left a loophole that some housing experts and lobbyists say could make the prohibition almost meaningless.
Last week, the Senate passed the 21st Century ROAD to Housing Act, a package meant to make housing more affordable. The bill, among other things, makes it easier to build manufactured homes, lessens regulations, and gives incentives to localities to encourage home building.
But one top goal of President Donald Trump and progressives such as Sen. Elizabeth Warren (D., Mass.) alike is for the bill to ban most home purchases by institutional investors, who snapped up single-family homes during the 2008 financial crisis and turned them into rentals. Trump and other supporters of a ban say such purchases have made homes unaffordable for many Americans.
The Senate bill prohibits investors who own at least 350 single-family homes from buying more homes and subjects them to a hefty fine if they do. But the bill also delineates a number of "excepted purchases" that enable investors to continue buying homes without penalty.
Though some of the exemptions require new financial burdens, some investors and housing industry lobbyists in recent days have homed in on one exception in particular that lets investors make a purchase "pursuant to a program to boost homeownership."
The exception would enable investor purchases so long as they allow renters to opt-in to have positive rent payments reported to credit bureaus and give renters a right of first refusal and first look if the investor were to decide to sell. The provision says that the program "may entail the meaningful financial support" of the investor, which some lobbyists are reading as more permissive than other exceptions that "require" such support.
Some of the largest single-family-rental investors, such as Invitation Homes, already offer the credit reporting feature, and investors often already give renters a "first look" when they choose to sell.
"With the home boost exemption, all you have to do is provide positive payment rental history, give tenants a 30-day right-to-buy for the home, and then you're done. Investors could drive a Mack Truck through it," said Jim Parrott, a housing industry consultant and nonresident fellow at the Urban Institute.
In recent days, housing industry lobbyists have internally noted the seeming permissiveness of that exemption and others as potential tools for defanging the investor ban, said people familiar with the matter.
The White House didn't respond to a request for comment.
The U.S. Treasury Department would be responsible for writing rules implementing the bill if it becomes law. A Senate aide, who wasn't authorized to speak on the record, noted the bill allows for the Treasury Secretary to clarify the bill's definitions "if the Secretary of the Treasury determines that such regulations will advance the availability of single-family homes for purchase by individual households."
The aide said the home-boost provision is "part of the bill's design to ensure housing ends up in the hands of people eventually."
The proposed single-family renter ban has weighed on some institutional investors' stocks. Shares of Invitation Homes and American Homes 4 Rent dropped 6% and 4.3%, respectively, on the day Trump announced he supported such a ban.
Since the White House's first steps to implement the ban, "capital flow has been stymied, to say the least," said Invitation Homes CEO Dallas Tanner at a conference earlier this month. At the conference, American Homes 4 Rent CEO Bryan Smith said the company's government affairs team is "highly engaged at the federal, state, and local levels."
Blackstone has said single-family rentals make up a relatively small part of its business and of the housing market as a whole. The company has also pointed out that large institutional investors in recent years have been net sellers of homes.
The Senate bill last week ran into fire from housing industry groups and Sen. Brian Schatz (D., Hawaii) over a different issue -- the bill's requirement for investors that develop build-to-rent communities to sell those homes within seven years. Unlike with the build-to-rent issue, investors wouldn't face a disposal requirement for buying homes under the home-boost exemption.
"The loopholes in this bill are really big, and it's honestly kind of surprising to us to see that there haven't been more people raising the alarm about it," said Sam Garin, a spokesperson at the Private Equity Stakeholder Project, a nonprofit that supports a stronger ban.
The Senate version of the bill isn't guaranteed to become law. Leaders in the House of Representatives -- which had passed its own housing bill earlier this year -- have said they plan to propose revisions and even potentially enter into negotiations with their Senate counterparts over the final text. Though the White House in the past has said it supports the Senate version, Trump himself hasn't yet gotten personally involved, which would likely be needed to get the bill over the finish line.
On Friday, a group of housing industry groups, including the National Association of Home Builders and the National Rental Home Council, sent a letter to House leaders encouraging them to modify the build-to-rent provision, arguing it "inexplicably takes new housing units off the table and would exacerbate our housing crisis."
As it stands, the combination of the stringent build-to-rent requirements and the relatively loose requirements for the exemption to boost homeownership will likely dissuade institutions from building new homes to rent out, wrote Parrott and Urban Institute fellow Laurie Goodman in a blog post on Monday.
"Given the enormous cost difference, we expect most new activity in the single-family space to use the home boosting exemption and ignore the exemption for build-to-rent housing," they wrote.
Write to Joe Light at joe.light@barrons.com
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March 16, 2026 18:10 ET (22:10 GMT)
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