US Senate Advances Housing Legislation that Includes a Ban on Institutional Investors Purchasing Single-Family Homes

On March 12, 2026, the US Senate passed, by a vote of 89 to 10, bipartisan housing legislation that includes a prohibition on large institutional investors (“LIIs”) purchasing single-family homes (“SFHs”). The legislation, H.R. 6644 (renamed by the Senate as the 21st Century ROAD to Housing Act), was previously passed on a bipartisan vote by the US House of Representatives but was substantially amended by the Senate. As amended, the legislation is comprised of most of the provisions from both the original House bill (H.R. 6644, the 21st Century Housing Act) and the Senate’s ROAD to Housing Act of 2025 (S. 2651), as well as the temporary ban on LIIs purchasing SFHs and a temporary prohibition on the Federal Reserve issuing a central bank digital currency (“CBDC”) (collectively, the “21st Century ROAD to Housing Act”). The White House issued a Statement of Administration Policy strongly supporting the 21st Century ROAD to Housing Act. Earlier this year, President Donald Trump signed an Executive Order establishing as administration policy that LIIs should not buy SFHs.

Despite the strong bipartisan vote for the legislation in both the House and Senate, the legislation’s future is unclear due to objections in the House about the Senate’s amendments, particularly the temporary prohibition on a CBDC. We expect further Congressional debate on the bill and will be updating this Legal Update to reflect any further Congressional actions.

THE 21ST CENTURY ROAD TO HOUSING ACT

The 21st Century ROAD to Housing Act includes 11 separate titles focused on a wide range of reforms to increase the supply of affordable housing in the United States. This Legal Update highlights some of these reforms.

Ban on LIIs purchasing SFHs: Under Section 901(b), the bill would prohibit any LII from purchasing (directly or indirectly) any SFH, which is defined as a structure with two or fewer units that are intended for residential dwelling (and is not a manufactured home). There are two exceptions to this prohibition—for “excepted purchases” and for purchases in connection with restructuring or reorganizing the ownership of an SFH owned or purchased pre-enactment. The bill would not require an LII to sell any SFH purchased before enactment. Significantly, the prohibition would self-terminate 15 years following enactment.

What is considered an LII? The 21st Century ROAD to Housing Act would define an LII as an investment fund or other for-profit entity (no matter how it is structured) that: (1) is in the business of investing in, owning, renting, managing, or holding SFHs, and (2) after enactment, directly or indirectly has investment control (alone or in concert with others) of not less than 350 SFHs. Any excepted purchase made after enactment does not count toward this total.

An entity would be considered to have direct or indirect investment control if it: (1) owns or has primary authority to make material investment or management decisions related to the SFH; (2) is or controls the general partner or managing member of the entity that owns the SFH; (3) is or controls the investment manager, management company, or investment advisor of the entity that owns the SFH; (4) owns or controls more than 25% of the entity that owns the SFH (unless the entity is a passive investor); or (5) otherwise controls the entity that owns the SFH.

What is an excepted purchase? An excepted purchase would be any purchase of an SFH that is:

• Newly constructed, renovated, or a rental conversion for sale by an LII and is not a rented residence pending sale;
• Part of a build-to-rent program in which the LII purchases newly constructed SFHs to manage as rental properties;
• Part of a renovate-to-rent program that (1) substantially rehabilitates SFHs that do not meet certain local building codes, and (2) makes improvements costing not less than 15% of the purchase price;
• Part of a homeownership program that: (1) requires rent and fees to be no greater than those collected by the LII on similar SFHs that are not part of the program; (2) is subject to a contract with the renter that is considered a consumer credit transaction secured by the dwelling or real property; (3) provides for positive reporting of rental payments to consumer reporting agencies; and (4) requires the contribution of “meaningful” financial support from the LII, including price concessions, for the renter to purchase the SFH (although meaningful is not defined);
• Part of a program to boost homeownership that: (1) provides positive reporting of rental payments for any renter who opts into reporting; (2) provides a right of first refusal and 30-day “first look” period; and (3) may include “meaningful” financial support, including price concessions, for the renter to purchase an SFH (whether the home the renter occupies or another home);
• In connection with repossession of the SFH to satisfy a debt;
• By a mortgage servicer, lender, or other entity related to loss mitigation or compliance with servicing or investor obligations related to foreclosure, deed-in-lieu, enforcement of security interest, or borrower default;
• Purchased from another LII that either owned the SFH at enactment or purchased the SFH in compliance with Section 901;
• Purchased from an investor not covered by Section 901, as long as the purchase is less than two years after the effective date of the legislation;
• Newly constructed, renovated, or a rental conversion that is intended for occupancy as part of a community of households with one or more members aged 55 years or older; or
• Made through a single purchase or a combination of the above excepted purchases.

Disposal of certain excepted purchases. The bill would require LIIs to sell SFHs purchased under certain excepted purchase exemptions to an individual homebuyer no later than seven years after the date of purchase. The excepted purchases that would be required to be sold are as follows:

• Newly constructed, renovated, or a rental conversion for sale by an LII and not a rented residence pending sale;
• Part of a build-to-rent program;
• Part of a renovate-to-rent program; or
• Newly constructed, renovated, or a rental conversion that is intended for occupancy with one or more members aged 55 or older if the SFH no longer meets the requirements of this provision.

The subsequent purchase of an SFH by an LII would not alter the LII’s disposal obligations. The requirement, however, would not apply to an LII that is a real estate investment trust if the sale would be a prohibited transaction that would lead to a 100% tax under the statute governing the entity. LIIs also would not be required to dispose of SFHs until an active lease expires. LIIs would be allowed to offer the renter the option to renew the active lease up to 36 consecutive months. In addition, LIIs would have to offer the renter the option to purchase the SFH and would have to advertise the property and make it accessible to individual homebuyers and the general public. If the SFH is not purchased—or an offer is not made to purchase—within 60 days of advertising, the LII would be in compliance with the disposal requirements.

Rulemaking. The bill would empower the Secretary of the Treasury to promulgate regulations to implement the purposes of Section 901. This includes enacting regulations to minimize market disruptions, to minimize negative impacts on consumers, and to further clarify the terms LII, SFH, and excepted purchase. The regulations, however, would not be able to alter the scope or type of excepted purchases to undermine the number of SFHs available to individuals.

Effective date. The prohibition and requirement to dispose of excepted purchases would take effect 180 days after enactment of the 21st Century ROAD to Housing Act, and the prohibition and disposal requirement would be automatically repealed 15 years after the effective date of the bill.

Temporary ban on the creation of a CBDC: Under Section 1001, the 21st Century ROAD to Housing Act would temporarily prohibit the Board of Governors of the Federal Reserve System (the “Federal Reserve”) or a Federal Reserve Bank from issuing or creating a CBDC or any substantially similar digital currency. The bill would define CBDC as a digital asset that is denominated in US dollars, is a US currency, is a direct liability of the Federal Reserve System, and is widely available to the public. The prohibition, however, would not restrict any dollar-denominated currency that is open, permissionless and private, and does not alter the privacy protections of US coins and physical currency. This temporary ban would be effective until December 31, 2030.

Other notable provisions: Under Section 208, the bill would streamline environmental reviews under the National Environmental Policy Act of 1969 (“NEPA”) for certain housing-related activities. In particular, the bill would reclassify certain housing-related activities as “categorical exclusions” not subject to certain obligations, such as environmental impact statement or environmental assessment requirements, if the project does not materially alter environmental conditions and does not materially exceed the original scope of the project. The categorical exclusion would apply to certain projects, including projects related to acquisitions of open space or residential property that will have the same use or be converted to open space to help residents from high-risk areas, conversion of existing office buildings subject to certain limitations, new construction, development, demolition, acquisition, or disposition of five to 15 dwelling units on one site, the voluntary acquisition of certain properties, and infill projects, which are defined in the bill.

Under Section 401, the Director of the Consumer Financial Protection Bureau (“CFPB”) would be required to submit a report on how loan originators (“LOs”) are compensated in the residential mortgage market. The report would be required to analyze the effects of LO compensation on the availability of small dollar mortgage loans, which are defined as loans under $100,000, and to discuss potential barriers to small dollar mortgage lending. After issuing the report, the CFPB may issue regulations concerning the types of compensation LOs can receive from lenders, as long as the regulations are consistent with the Truth in Lending Act and would result in LOs receiving compensation for originating small dollar mortgages that is not less than LO compensation for originating non-small dollar mortgages.

Section 402 would require the Director of the CFPB to evaluate the impact of the points and fees thresholds on small dollar mortgage originations. The bill would allow the CFPB to issue regulations to amend the points and fees limitations to encourage additional small dollar mortgage lending.

Under Section 403, the bill would focus on increasing the number of appraisers, including by allowing State credentialed trainee appraisers or unlicensed trainee appraisers to assist State certified appraisers (who will remain liable for appraisal and valuation work) and by making grants to State appraiser certifying and licensing agencies to support activities related to addressing workforce needs.

NEXT STEPS

The legislation now returns to the House where it faces an uncertain future. Members of Congress who support a ban on the Federal Reserve issuing a CBDC oppose the bill on the grounds that its temporary prohibition on the issuance of a CBDC would give rise to an inference that the Federal Reserve would be authorized to issue a CBDC following expiration of the temporary prohibition. There are also concerns that the Senate did not include in its amended bill the community bank regulatory reforms contained in the House-passed version of the bill. Further, numerous trade associations representing the housing industry now oppose the legislation due to the inclusion of the ban on LIIs purchasing SFHs. As a result, the legislation could be amended in the House and then sent back to the Senate or, alternatively, even stall completely if the two chambers are unable to resolve their differences. We will continue to monitor Congress’s consideration of the legislation and will provide updates on key developments.