A new provision in the Senate’s housing legislation would force large investors that build single-family rental homes to sell those properties within seven years — a move lawmakers say could help make homeownership more accessible but that industry groups warn could disrupt housing supply, The Wall Street Journal reports.
The measure, added to a bipartisan housing bill now moving through the Senate, would require large investors to dispose of newly built homes that were originally constructed to be rented out.
The requirement would apply to large real-estate investment firms and institutional landlords that have expanded rapidly in the single-family housing market in recent years.
Supporters say the proposal is meant to give ordinary homebuyers a better shot at purchasing houses instead of competing with deep-pocketed investors.
“It’s about making sure people like the single mom who raised me in North Charleston, South Carolina, have even greater access to economic opportunity and the American dream of homeownership,” said Sen. Tim Scott, R-S.C., who is co-sponsoring the bill with Sen. Elizabeth Warren, D-Mass.
The Senate could vote on the housing package as soon as this week.
The seven-year sale rule builds on an earlier proposal backed by the White House that would bar large institutional investors from buying existing homes. That earlier plan exempted developers that build houses specifically to rent them out.
The Senate’s new provision now takes aim directly at the “build-to-rent” industry.
Investors and homebuilders say the requirement would make it far harder to finance rental developments because investors would be forced to sell the homes after only a few years.
Industry groups including the National Association of Home Builders and the National Multifamily Housing Council sent letters to the White House and lawmakers opposing the plan.
Critics warn the rule could ultimately reduce the supply of new homes and push housing costs even higher.
A report from John Burns Research and Consulting said the proposal could discourage investment in new housing.
“The capital devoted to rental development will have to look for opportunities elsewhere,” the report said. “We believe the number of new homes constructed in America will be less.”
Builders also warn the requirement could create difficult situations for renters if investors are forced to sell properties that tenants cannot afford to buy.
The House has already passed its own housing bill, which does not include limits on institutional home investors. That means lawmakers from both chambers may need to negotiate before a final bill can reach President Donald Trump.
If Congress ultimately approves the measure and Trump signs it into law, it would represent the first major federal housing legislation in decades.
Large institutional investors became major players in the housing market after the 2008 financial crisis, buying up distressed homes and later expanding into purpose-built rental developments.
While they still own only a small share of the nation’s housing stock overall, in some fast-growing cities, investors have accounted for more than 20% of home purchases during the pandemic housing boom.
Supporters of the Senate bill argue the new restrictions are needed to shift more homes back toward traditional buyers.
But housing industry groups say the policy could backfire.
“In a housing supply bill, this is an anti-housing supply policy,” said Adrianne Todman, chief executive of the National Rental Home Council, which represents institutional home investors.
© 2026 Newsmax Finance. All rights reserved.