A bipartisan Senate housing package has received broad support from the home building and housing finance industries since it was first introduced last July as the ROAD to Housing Act, the acronym standing for “Renewing Opportunity in the American Dream.”
But a specific provision involving build-to-rent (BTR) housing in a modified version of the bill — now called the 21st Century ROAD to Housing Act — has received backlash from prominent mortgage and housing groups.
The provision in question is part of Section 901 of the bill, titled “Homes Are for People, Not Corporations.” On a broad level, that section seeks to codify President Donald Trump’s proposal to curb single-family home purchases by large institutional investors.
A dozen industry trade groups — including the Mortgage Bankers Association (MBA), the National Association of Home Builders (NAHB) and the National Housing Conference (NHC) — objected to a provision in that section that would require investors to sell certain homes, including BTR housing, within seven years of purchase.
In a letter reviewed by Scotsman Guide that was sent to Senate leaders on Tuesday, the trade groups cautioned that the seven-year disposition requirement “will effectively shut down BTR development,” which they believe “would take hundreds of thousands of housing units off the market over the next decade, many of which would serve lower- and middle-income households.”
“BTR is underwritten, financed and constructed as multifamily housing,” the letter continued. “It is not possible to sell individual units as single-family homes, which is what the Senate proposal would require. Selling off BTR homes would require the entire loan to be paid off at the same time.”
The organizations stressed they “strongly support legislation that expands housing supply and affordability,” but are seeking a “clean exemption of BTR” from the single-family properties targeted by the bill.
As an MBA spokesperson explained in an email to Scotsman Guide, “Our group is asking lawmakers to revise the provision to ensure that build-to-rent projects are not inadvertently swept into the legislation so private capital can continue supporting the development of much-needed rental housing.”
Besides the MBA, NAHB and NHC, groups that endorsed the letter to Senate leaders included the Affordable Housing Tax Credit Coalition; Institute of Real Estate Management; Leading Builders of America; National Affordable Housing Management Association; National Apartment Association; National Leased Housing Association; National Multifamily Housing Council; National Rental Home Council; and The Real Estate Roundtable.
Senate advances bill, teeing up floor vote
In a procedural vote Tuesday, the Senate overwhelmingly voted to advance the 21st Century ROAD to Housing Act by a margin of 89-9-1. That sets the stage for a full floor vote on the bill, which could come as soon as Thursday.
Should the package receive full Senate approval, it would then need to be reconciled with a bill that was approved by the House of Representatives on Feb. 9 called the Housing for the 21st Century Act.
According to an analysis by the Bipartisan Policy Center, the 42 sections of the revamped 21st Century ROAD to Housing Act “includes 18 sections from both the House and Senate bills and at least 26 sections that incorporate previously introduced bipartisan legislation.”
In an interview with Scotsman Guide conducted in late February, Kimber White, president of the National Association of Mortgage Brokers (NAMB), noted that the competing housing packages share the common denominator of seeking to boost housing supply and affordability by modernizing guidelines and cutting red tape.
Overall, White believes that the versions of the House and Senate bills then proposed would “really help move the housing needle for supply and affordability.” But he added there are limits to supply-only solutions.
“I think the supply side will start helping with the affordability crisis, but it’s not going to help until we get taxes and insurance down,” he said.
The NAMB president added he would also like to see Congress focus on shoring up downpayment assistance programs to provide incentives and affordability relief for first-time homebuyers.
But even while acknowledging the proposed legislation’s limitations, saying “you cannot build your way out of this wealth inequality gap,” White hopes the House and Senate work through their differences and see the combined housing package to the finish line.
“Both of these bills coming together works best for the consumer and the mortgage industry and will actually bring us one step closer to bringing [improved] affordability, which is sorely needed,” he said.
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Daniel Banta contributed reporting.
