21st Century ROAD to Housing Act Advances Through Senate: Evaluating the Potential Impact on Institutional Investment in Housing

Overview

On March 12, 2026, the Senate passed the 21st Century ROAD to Housing Act (the “Bill”) by a vote of 89-10. The Bill represents one of the most sweeping housing reform initiatives in decades, combining elements of the Senate’s ROAD to Housing Act (S. 2651) with components of the House of Representatives’ Housing for the 21st Century Act (H.R. 6644), both of which recently passed in their respective chambers.

Of particular importance for the institutional real estate investor community in the Bill is Title IX, “Homeownership For Main Street America.” Title IX was added by the Senate in response to Executive Order 14376 (“Stopping Wall Street from Competing with Main Street Homebuyers”), issued by President Trump earlier this year, which directed various cabinet departments to issue guidance aimed at: (1) preventing agencies and government-sponsored enterprises from facilitating the acquisition of single-family homes by large institutional investors; (2) preventing federal assets from being disposed of in a manner that transfers single-family homes to large institutional investors; and (3) promoting sales of single-family homes to individual owner-occupants. Section 901 of the Bill (“Homes Are For People, Not Corporations”) provides that “[n]o large institutional investor may purchase, or enter into a contract to directly or indirectly purchase, any single-family home.” Under the Bill:¹

• “Large institutional investor” generally includes any for-profit legal entity engaged in the business of investing in, owning, renting, managing or holding single-family homes and, alone or together with other entities, has investment control of 350+ single-family homes.
• “Single-family home” includes a structure that contains 2 or fewer dwelling units that are each intended for residential occupancy by a single household and excludes manufactured housing.
• “Purchase” includes any purchase, transfer, or other acquisition of a single-family home, including through mergers, acquisitions, construction, foreclosures, or bulk purchases, whether or not for cash consideration.

To become effective, the Bill would need to be approved by the House of Representatives and then signed by the President. It is unclear how the House of Representatives will approach the Bill, with potential options including (i) formation of a conference committee to resolve differences between the Bill and the House’s Housing for the 21st Century Act, (ii) the House modifying the Bill and returning it to the Senate for approval, or (iii) not voting on the Bill.

While the Bill’s future remains uncertain, industry participants are understandably wary of the foregoing prohibition, which defines “large institutional investor” and “purchase” broadly to capture the acquisition of “single-family homes” by a broad swath of investors and to include construction of new homes.

Excepted Purchases

The Bill’s broad general prohibition on institutional ownership of single-family homes is subject to a number of exemptions that serve to limit its scope, though those carveouts are themselves subject to important limitations as further described below. Namely, the ban does not apply to the following types of “excepted purchases” of single-family homes by large-institutional investors:

A. Newly constructed, renovated or a rental conversion for sale by a large institutional investor and not as a residence rented pending sale;
B. Pursuant to a build-to-rent (BTR) program where a large institutional investor purchases newly-constructed homes to be managed as rental properties (or rental and owner-occupied mix);
C. Pursuant to a renovate-to-rent program that brings homes up to code and makes improvements valued at 15%+ of purchase price;
D. Pursuant to a homeownership program that charges comparable rent, includes reporting of rental payments to consumer agencies and provides meaningful financial support (including price concessions) towards purchase of single-family home by renter;
E. Pursuant to a program to boost home ownership that includes reporting of rental payments to consumer agencies, provides a ROFR and 30-day “first look” period and may entail meaningful financial support (including price concessions) towards purchase of single-family home by renter;
F. In satisfaction of debts, allowing large institutional investor the right to repossess a single-family home;
G. As a result of a foreclosure, deed-in-lieu, enforcement of mortgage, deed of trust or other security interest or operation of law following borrower default; 
H. Purchased from another large institutional investor that either owned the single-family home as of the effective date of the Bill or purchased the single-family home in compliance with this section;
I. Purchased from an investor not covered under this section, so long as the purchase occurs within 2 years after effective date of the Bill;
J. Newly constructed, renovated, or rental conversion for occupancy as a community for households with one or more individuals over 55 years old and satisfies visitability standards of HUD; or
K. Purchases through any combination of (A) through (J).

In addition, any purchase of a single-family home in connection with a restructuring or other reorganization of ownership of single-family homes that were owned or purchased on or before the date of enactment of the Bill will not be subject to the Bill’s prohibition.

The Bill would not require a large institutional investor to divest or otherwise sell any single-family home purchased prior to the date of enactment of the Bill.

Seven-Year Disposal Requirement

While the above categories of “purchases” are exempt from the Bill’s general prohibition on purchases of single-family homes by large institutional investors, several key categories of the exempt purchases are subject to a requirement that the large institutional investor sell those homes to individual purchasers within seven years of the date of the exempt purchase. These categories include purchases by large institutional investors under the following clauses of the “excepted purchases” described above:

• clause (A) (i.e., newly-built or renovated for-sale homes);
• clause (B) (i.e., acquired pursuant to build to rent programs);
• clause (C) (i.e., qualifying renovate-to-rent programs); or 
• clause (J) at such time as clause (J) no longer applies (i.e., no longer qualifying senior housing)

Key takeaways regarding the 7-year disposition requirement include:

• The 7-year disposition requirement “runs with property” – i.e., any exempt purchase subject to the 7-year disposition requirement remains subject to the 7-year disposition requirement notwithstanding a subsequent purchase by another large institutional investor. 
• The 7-year disposition requirement does not apply if the large institutional investor is a real estate investment trust (REIT) and such sale would be a prohibited transaction under Section 857(b)(6) of the Internal Revenue Code, triggering a 100% tax.
• The 7-year disposition requirement may be extended with respect to any single-family home subject to a lease effective at least six months prior to the expiration of 7-year period. Large institutional investors may extend such a lease for up to 36 months upon written election by renter, but must advertise the single-family home for sale beginning on the earlier of (x), the date the renter declines to renew, or (y), the date the lease expires.
• Any single-family home required to be disposed of pursuant to the 7-year disposition requirement is subject to a right of first refusal and 30-day “first look” period in favor of the renter.
• If the applicable renter declines to renew its lease or declines to purchase the home pursuant to procedures set forth in the Bill, the large institutional investor must widely advertise the home and if the home is not purchased, or no offer to purchase is made, by an individual homebuyer within 60 days, then the large institutional investor shall be deemed to have complied with the 7-year disposition requirement.

Enforcement, Penalties, and Effective Period

Large institutional investors that violate the provisions of Section 901 would be subject to a civil penalty equal to the greater of $1,000,000 or three times the purchase price per violation.

If ultimately signed into law, Section 901 would take effect 180 days after the date of enactment. Section 901 also includes a sunset provision, which holds that the prohibitions and requirements under the Bill are set to be repealed 15 years after the effective date.

Conclusion

The build-to-rent industry has expanded in recent years as US housing preferences have shifted. Many institutional real estate investors are committing billions of dollars toward placing build-to-rent homes, according to RSM International. Demand is being driven by renters-by-choice and affordability pressures, with 36% of respondents to a 2025 John Burns Research and Consulting survey identifying as renters by choice, up from 27% a year earlier. At the same time, Green Street notes that the premium cost for homeownership and inadequate savings for a down payment are likely to continue supporting rental demand, reinforcing the sector’s long-term fundamentals.

The Bill’s general prohibition and 7-year disposition requirement for some of the more critical exceptions (notably, the Build-to-Rent exception) would, in its current form, fundamentally alter the investment thesis for many institutional players, as it would significantly alter the hold period and exit options for these investments. Even pre-enactment, the passage of the Bill by the Senate has created uncertainty for the industry that is impacting many investors’ current investment decisions today.

Industry participants should closely monitor this Bill as it progresses through the House and consider its potential impacts as they make investment decisions. Involvement with industry groups and proactive outreach to lawmakers may be prudent as the House considers the contents of the Bill. Please contact the Goodwin team with any questions related to the Bill or other information in this client alert.

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1. ^[1] Note: All definitions and other provisions of the Bill summarized herein do not include the full text of the Bill. The full text of the Bill should be consulted directly for all applicable provisions. ↩

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.