The Senate is edging closer to passing a substantial housing package aimed at improving affordability, but tensions are brewing over a pivotal provision championed by former President Donald Trump. The legislation—the Housing for the 21st Century Act—passed the House by a remarkable bipartisan vote of 390-9 last month. It features a comprehensive array of measures designed to increase the availability of affordable housing. As lawmakers cleared another procedural hurdle, a final vote is anticipated before they adjourn Washington on Thursday.
Key figures in the effort include Sen. Tim Scott (R-S.C.), chair of the Senate Banking, Housing and Urban Affairs Committee, and Sen. Elizabeth Warren (D-Mass.), the committee’s leading Democrat. Their collaboration highlights an uncommon moment of agreement across party lines. “When President Trump and Elizabeth Warren and Senate Republicans can all come to the same place on a housing bill,” Scott remarked on CNBC’s “Squawk Box,” “it shows that if you put partisan politics aside and focus on the issues impacting the American people, you can get results.”
The act, in its original form, was primarily geared towards assisting first-time homebuyers and lower-income individuals to access the housing market. However, the initial proposal lacked a critical element Trump sought: a ban on institutional investors—like hedge funds or large corporations—from purchasing single-family homes. During his State of the Union address earlier this year, Trump urged Congress to solidify such a ban. “I’m asking Congress to make that ban permanent because homes for people—really, that’s what we want,” he stated. “We want homes for people, not for corporations.”
Following Trump’s push, Scott and Warren incorporated that ban into the bill, aiming to prevent large-scale investors from dominating the home-buying market. This provision also requires corporations that exceed a specific ownership threshold to divest within a seven-year timeframe. Supporters see this as a necessary measure to protect individual homeowners and families, aligning with Trump’s vision of promoting homeownership among the public.
However, this institutional investor ban is raising red flags among some Senate Democrats and industry experts. Critics argue that this provision could stifle the development of build-to-rent housing units. Sen. Brian Schatz (D-Hawaii) expressed concerns during a recent Senate floor discussion, stating, “there is a problem” with the bill. He pointed out that the definition of institutional investor would capture individuals or entities that own and rent out more than 350 units, thereby forcing them to sell after seven years. “There’s literally no reason for this,” Schatz asserted. “And the problem is that it was written in such a way that it was trying to capture the hedge fund problem, but they wrote it wrong.”
This sentiment was echoed by members of the housing and rental industry, who urged lawmakers to reconsider the seven-year divestment clause. In a letter addressed to Scott and Warren, they warned that such a requirement could “effectively shut down build-to-rent development, leading to less supply and fewer options for renters.” The potential consequences of this provision could derail various housing initiatives and make it more difficult for renters to secure stable living conditions.
As the Senate works toward a final vote on the Housing for the 21st Century Act, the clash between affordability efforts and the concerns of industry stakeholders illustrates the complexities involved in crafting housing policy. Balancing the need for affordable homes with the realities of market dynamics will be crucial in determining the bill’s ultimate impact. This legislation, while ambitious, will require careful consideration of the interests of both potential homeowners and the entities that may influence the housing market moving forward.
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