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The Senate moved closer Wednesday to advancing a sweeping housing package aimed at boosting affordability, but a Trump-backed provision banning institutional investors from buying single-family homes is emerging as a flashpoint.
Lawmakers cleared another procedural hurdle for the bill on Wednesday, setting up a likely final vote before they leave Washington on Thursday.
The Housing for the 21st Century Act passed the House last month in a 390-9 bipartisan vote. The legislation includes a wide-ranging slate of measures designed to increase the supply of affordable housing.
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Sen. Tim Scott, R-S.C., the chair of the Senate Banking, Housing and Urban Affairs Committee, and Sen. Elizabeth Warren, D-Mass., its top Democrat, teamed up to advance and modify the bill in the Senate.
“When President [Donald] Trump and Elizabeth Warren and Senate Republicans can all come to the same place on a housing bill, it shows that if you put partisan politics aside and focus on the issues impacting the American people, you can get results,” Scott told CNBC’s “Squawk Box.”
In its original form, the legislation was primarily intended to help first-time homebuyers and lower-income Americans enter the housing market or gain access to more affordable housing options.
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But the initial bill lacked a key policy Trump wanted: a ban on institutional investors, such as hedge funds or large corporations, buying single-family homes. Trump earlier this year signed an executive order banning the practice and urged Congress to codify it during his State of the Union address.
“I’m asking Congress to make that ban permanent because homes for people — really, that’s what we want,” Trump said. “We want homes for people, not for corporations.”
Scott and Warren added that provision to the bill. If passed, the package would also incorporate several policies from the ROAD to Housing Act, a separate Senate housing proposal that previously stalled.
The provision would prohibit large-scale investors from purchasing single-family homes and would require companies that exceed a certain ownership threshold to divest within seven years.
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But the institutional investor ban is drawing concerns from some Senate Democrats and industry stakeholders, who argue it could eliminate build-to-rent housing units.
Sen. Brian Schatz, D-Hawaii, said on the Senate floor that “there is a problem” with the bill. He argued the ban on corporations and hedge funds buying single-family homes was written in a way that would force “anybody who owns and rents out more than 350 units, single family or duplexes” to sell after a seven-year period.
“There’s literally no reason for this,” Schatz said. “And the problem is that it was written in such a way that it was trying to capture the hedge fund problem, but they wrote it wrong.”
“And so the definition of institutional investor says, essentially, anyone who owns and operates more than 350 units to rent — that’s bananas,” he continued.
Several members of the housing and rental industry wrote in a letter to Scott and Warren that the seven-year clause would “effectively shut down build-to-rent development, leading to less supply and fewer options for renters.”
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