The bipartisan bill would not allow investors or businesses to buy single-family homes if they already own 350 or more units. Companies that increase the supply of housing through construction or renovations will not be limited to 350 units, but will be required to sell the properties within seven years.
The Senate passed the bipartisan housing affordability bill by a vote of 89-10 on Thursday.
But the 21st Century Housing Act, authored by Republican Sen. Tim Scott of South Carolina and Democratic Sen. Elizabeth Warren of Massachusetts, still needs to be passed by the House, which introduced its own bipartisan bill in February.
Mr. Scott and Mr. Warren’s sweeping 303-page bill would establish subsidies and pilot programs for new construction and amend federal definitions to encourage the construction of more housing. It also includes a ban on major institutional investors purchasing certain single-family homes, something President Trump has recently advocated.
CNBC reports House Republican leaders have said the bill requires some level of negotiation, and House Majority Leader Steve Scalise (R-Louisiana) said in a closed session earlier this week that lawmakers would likely quarrel over the differences between the two affordability bills.
“If we think the Senate is going to take this drug, we’re going to go to conference,” Scalise reportedly told the committee.
One of the key points of contention will be the investor ban, which states that investors or companies will not be allowed to buy single-family homes if they already own more than 350 units.
Companies that help increase the housing supply through construction or renovation, but not limited to 350 units, will be required to sell the property within seven years of owning it. The investor clause has sparked significant debate among economists and home builders about the bill’s potential impact on new home construction.
The investor ban was not included in either the original bill or the House bill, but was added after President Trump indicated he would not sign the affordability bill without it.
Scott told NBC News that the bill would help advance the president’s affordability policies by “cutting regulatory red tape, lowering costs, and expanding the supply of housing without creating new spending.” Meanwhile, Warren said the bill is an effort to “increase housing supply and lower costs” by reining in big investors.
“For the first time, it means moving home prices in a better direction and taking private equity out of the system,” the Massachusetts senator told NBC News.
The National Association of Home Builders and the National Multifamily Housing Council oppose the bill’s seven-year investor ban. But the National Association of Realtors supports the bill, saying earlier this month that recent additions, including a seven-year ban, would help address barriers to increasing housing supply.
Sen. Brian Schatz (D-Hawaii) praised the bill for its many good policies, but criticized the seven-year ban on investors.
“There is literally no reason for this,” Schatz said Thursday on the Senate floor. “People who want to build a house and offer it for rent will be forced to sell after seven years…A lot of these people aren’t really in a position to sell after seven years. They won’t get their money back.”
“This is definitely the Soviet Union,” he added.
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