Reducing housing costs: US Senate passes housing bill, investor restriction provisions may spark controversy in the House of Representatives

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Local time on Thursday, the U.S. Senate passed a bipartisan bill by a vote of 89 to 10, aimed at increasing the supply of housing in the United States. This bill also sets the stage for a debate in the House of Representatives, as it includes a controversial provision intended to limit Wall Street investors’ influence in the housing market.

According to the bill, investors who own more than 350 properties will be prohibited from purchasing new single-family homes. The chairman of the U.S. Senate Banking Committee, Republican Senator Tim Scott of South Carolina, told reporters last week that this provision is a temporary amendment to the bill and a key factor in gaining White House support.

U.S. home builders and mortgage institutions oppose a specific provision in the investor restriction. Although “build-to-rent” housing is largely excluded from the ban—since policymakers worry that weakening construction incentives would limit housing supply—the bill still requires investors to sell certain properties within seven years, including homes built specifically for renting and those renovated for rental purposes.

On Tuesday, twelve housing and real estate industry organizations opposed this provision in a letter to Senate leadership, urging modification to the parts related to build-to-rent housing. Although leaders from both parties hope to show voters ahead of the November midterms that they are addressing concerns about living costs, these voices of opposition may threaten the bill’s prospects in the House of Representatives.

Massachusetts Democratic Senator Elizabeth Warren negotiated this provision with the White House. However, the requirement to sell properties within seven years has caused divisions among Democratic leadership.

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