21st Century ROAD to Housing Act: Insights on the Impact to Institutional Investment in the Single-Family Residential Rental Market

Executive Summary

After months of legislative activity, the 21st Century ROAD to Housing Act (H.R. 6644) (the “Act”) has been enacted into law. On June 23, 2026, the House concurred, by a vote of 358-32, to advance a Senate amendment of the version of the proposed Act that had passed the same week by a vote of 85-5, and this amended version became law on July 11, 2026, as a result of automatic enactment under Article I, § 7 of the Constitution.

The Act addresses a variety of housing policy initiatives related to, among other things, housing supply in economically distressed areas, manufactured housing, veterans’ housing and access to “small-dollar” mortgages. This client alert focuses on the provisions of the Act that have been the central focus of the institutional investor community: broad restrictions and related requirements with respect to large institutional investors’ acquisition and ownership of single-family homes.

Legislative Background

 The legislation emerged from parallel tracks in the House and Senate, each responding to a deepening national housing affordability crisis driven by a variety of factors including constrained supply, elevated mortgage rates, rising property insurance costs and local zoning restrictions.

On March 12, 2026, the Senate passed a prior version of the proposed Act by a vote of 89-10, which Goodwin summarized in a prior client alert. The House subsequently passed an amended version of the proposed Act on May 20, 2026, by a vote of 396-13. The amended text restored certain House priorities while removing the Senate’s controversial seven-year divestiture requirement (which would have required sales of single-family homes within seven years after their acquisition pursuant to certain exemptions in this prior version of the proposed Act), which Goodwin also summarized in a prior client alert.

On June 16, 2026, the Republican and Democratic leaders of the two committees with jurisdiction over housing — Senators Tim Scott (R-S.C.) and Elizabeth Warren (D-Mass.) of the Senate Banking, Housing, and Urban Affairs Committee, and Representatives French Hill (R-Ark.) and Maxine Waters (D-Calif.) of the House Financial Services Committee — released a negotiated compromise. After the Senate passed that text on June 22, 2026 by a vote of 85-5 and the House accepted it on June 23, 2026 by a vote of 358-32, the president canceled a scheduled signing ceremony on June 24. Subsequently, the Act became law on July 11, 2026 pursuant to the automatic mechanism under Article I, § 7 of the Constitution.

Under Article I, § 7 of the Constitution, a bill that has been presented to the president becomes law without his signature if he neither signs nor returns it to Congress within 10 days (Sundays excepted), so long as Congress remains in session during that period. Because the president neither signed nor vetoed the Act within that window and Congress had not adjourned so as to prevent its return, the Act became law by operation of this constitutional provision rather than by presidential signature after the tenth day ended. 

Overview of Key Provisions Applicable to Large Institutional Investors

Section 1001 of the Act (entitled “Homes Are For People, Not Corporations”) is the most commercially significant for the real estate investment community with respect to investment in single-family rental (SFR) and build-to-rent (BTR) investments. The provision was added in response to President Trump’s Executive Order 14376 (“Stopping Wall Street from Competing with Main Street Homebuyers”), which directed federal agencies and government-sponsored enterprises (GSEs) to limit institutional acquisition of single-family homes.

Covered Transactions and Entities

The following key definitions in Section 1001 of the Act are critical for determining who and what is covered by the prohibition:

• “Large institutional investor” is defined as any investment fund, corporation, partnership, limited liability company, joint venture, association, or other for-profit legal entity that: (1) is engaged in the business of investing in, owning, renting, managing or holding single-family homes; and (2) alone or in concert with one or more other entities, beginning after the date of enactment of the Act, directly or indirectly has “investment control” of 350 or more single-family homes, excluding those purchased after enactment of the Act pursuant to an “excepted purchase” (as further described below).
• “Single-family home” means a structure with two or fewer dwelling units that are each intended for residential occupancy by a single household. Manufactured homes (as statutorily defined) are expressly excluded from the definition.
• “Purchase” is defined to include 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. This is a notably expansive definition (i.e., includes construction in addition to acquisitions of existing homes).

The Core Prohibition

The Act provides that no large institutional investor may purchase or enter into a contract to directly or indirectly purchase, any single-family home, subject to the “excepted purchases” and other exceptions described below. Importantly, the prohibition does not require divestiture of homes “purchased” prior to the date of enactment of the Act.

Enactment Date, Effective Date and Sunset

• Date of enactment of the Act: July 11, 2026
• Effective date of the Act: January 7, 2027 (180 days after enactment)
• Sunset date: January 7, 2042 (15 years after the effective date)

Key Exceptions

The prohibition on purchases by large institutional investors does not apply to the purchase of a single-family home that is:

• (A) For-Sale Newly Constructed, Renovated or Rental-Conversion Homes: newly constructed, renovated, or a rental conversion for sale by a large institutional investor (not rented pending sale).
• (B) Build-to-Rent (BTR) Programs: Pursuant to a build-to-rent program where the large institutional investor purchases, constructs, or constructs and retains newly constructed homes to be managed as rental properties. Notably, the final version of the Act removes the Senate’s previously proposed seven-year mandatory divestiture requirement for BTR properties. 
• (C) Renovate-to-Rent Programs: Renovate-to-rent programs that (i) substantially rehabilitate single-family homes that do not meet local building code requirements and (ii) make improvements of at least 15% of the purchase price of the applicable single-family home.
• (D) Qualifying Homeownership Programs (Rent-to-Own): Pursuant to a homeownership program which, among other specified requirements, features comparable-market rent, opt-in positive rent reporting to consumer reporting agencies, and meaningful financial support toward the renter’s purchase of the home.
• (E) Programs to Boost Homeownership: Pursuant to a homeownership program featuring certain renter benefits, including opt-in positive rent reporting, a right of first refusal for renters and a 30-day “first look” purchase period.
• (F–G) Debt Satisfaction and Foreclosure: Homes acquired through debt satisfaction, foreclosure, deed-in-lieu or enforcement of a mortgage or security interest following borrower default (subject to certain limitations outlined in the Act).
• (H) Purchases From Other Large Institutional Investors: Purchases from another large institutional investor that owned the home on the date of enactment of the Act (i.e., July 11, 2026) or purchased the home in compliance with Section 1001 of the Act.
• (I) Purchases From Non-Covered Investors (2-Year Window): Purchases from investors not covered by Section 1001 of the Act, if purchased within two years after the effective date (i.e., on or before January 7, 2029) of the Act.
• (J) Age-55+ Communities: Newly constructed, renovated or rental-conversion homes that are intended and operated for occupancy as part of a community for households with one or more members aged 55 or older that satisfy HUD visitability standards.
• (K) Combination Purchases: Purchases through any combination of exceptions (A) through (J) above.

Additionally, purchases in connection with the restructuring or reorganization of ownership of homes already owned or purchased on or before the date of enactment of the Act (i.e., July 11, 2026) are excluded from the core prohibition described above (though note that this exclusion is not an “excepted purchase” under the Act).

Penalties and Reporting

• Civil Penalties: If the general prohibition of purchases of single-family homes by large institutional investors is violated, the Act allows an action to be brought against the violating investor for a civil penalty no more than the greater of (i) $1,000,000 per violation or (ii) three times the purchase price of the property involved.
• Annual Reporting: Large institutional investors must notify HUD by December 31 of each year, and no later than 180 days after the enactment of the Act, of the total number of single-family homes under their direct or indirect investment control, and the city and state in which each such home is located (except where the investor owns 10 or fewer homes in a given city). In addition, by March 31 of each year, HUD shall submit to Congress a public report which analyzes and aggregates the information received or obtained by HUD through the renter outreach resource and the reports from large institutional investors.

Renter Outreach Resource

The Act directs HUD to establish a renter outreach resource designed to assist renters of residential properties owned by a large institutional investor. The resource is intended to help renters with:

1. Notifying federal agencies about disputes, including potential violations of federal law;
2. Sharing information about such disputes with other federal agencies; and
3. Monitoring and, to the extent practicable, resolving such disputes.

Each large institutional investor is required to provide written notice about the renter outreach resource to each renter at the time of first occupancy and annually thereafter, including the name, phone number, and email address of the person responsible for receiving and addressing renter disputes (which is required to be updated within 30 days if that information changes). Large institutional investors must also prominently feature information about the renter outreach resource on their public websites.

Rulemaking Authority

Rulemaking authority to implement Section 1001 rests with the U.S. Department of the Treasury, working in consultation with HUD, FHFA, and the SEC. However, the Act contains specific limitations on the Department of Treasury’s ability to administratively alter the general prohibition or who is exempt from it. Treasury can be expected to provide a notice of proposed rulemaking before taking any action, which will provide interested parties an opportunity to comment before any rule is finalized. The rulemaking process is typically an extended undertaking, and thus it is reasonably likely that requirements and prohibitions of Section 1001 will become effective before implementing regulations from Treasury are adopted and finalized.

Practical Implications for Clients

Implications of the Act will vary for investors based on a number of factors, including investment strategy (e.g., BTR vs. SFR), portfolio size, and equity structure, and capital stack (including implications with respect to mortgage and other lenders).

Firms approaching or exceeding the 350-home threshold (taking into account its application to multiple entities acting “in concert”) should promptly begin the process of evaluating these implications with respect to their portfolios. The 180-day grace period before the effective date provides time to consider the impact of the Act on their acquisition and development pipelines and disposition strategy, but internal compliance work should begin now to evaluate the application of the Act and, where it does apply, the impact to ongoing business.

As noted above, the removal of the seven-year mandatory divestiture requirement for BTR programs from the final version of the Act is significant. However, the “excepted purchases” on which institutional investors will now have to rely should be carefully reviewed to determine how they apply to properties that are owned, under development, or under consideration to be developed or acquired. 

Conclusion

The 21st Century ROAD to Housing Act is widely viewed as the most significant federal housing legislation in decades. The Act was enacted July 11, 2026, and the enforcement provisions for the Institutional Investor Prohibition take effect on January 7, 2027. Owners, developers, investors, lenders, attorneys, and public agencies across the housing ecosystem should begin analyzing how the Act’s varied provisions apply to their specific circumstances, continue to follow the rulemaking process, and be prepared to comply with the Act when it becomes effective on January 7, 2027.