Treasury Implements New Measures to Enhance Homeownership Opportunities

The United States Department of the Treasury has promulgated proposed regulations designed to enhance housing affordability for diligent American citizens. These proposed regulations operationalize the provisions of Section 1001 contained within the 21st Century ROAD to Housing Act (ROAD to Housing Act), which establishes limitations on major institutional investors’ acquisition of single-family residential properties, thereby formalizing essential mandates established through President Trump’s Executive Order 14376, titled Stopping Wall Street from Competing with Main Street Homebuyers.

“Under President Trump, this Administration continues to restore the path to affordable homeownership for millions of young and working families,” said Treasury Secretary Scott Bessent. “Treasury is working to ensure American families and workers have a fair shot at purchasing homes in their communities by increasing housing supply and limiting large institutional investors’ role in the market, while supporting a strong, stable housing market and avoiding unnecessary disruption.”

Large institutional investors are typically prohibited from buying or entering into a contract to buy a single-family house starting on January 7, 2027, unless the acquisition meets the requirements of the ROAD to Housing Act as a “excepted purchase.” According to the ROAD to Housing Act, a company is considered a big institutional investor if it has direct or indirect investment control over at least 350 single-family houses and is involved in the business of investing in, owning, renting, managing, or holding such homes.

Purchases made in accordance with build-to-rent programs, renovate-to-rent programs, homeownership programs, and programs to increase homeownership are among the categories of excluded purchases permitted by the ROAD to Housing Act.

NPRM sets forth Treasury’s proposed framework to:

• Establish standards for purchases made pursuant to build-to-rent programs that promote continued investment in new housing; 
• Provide a safe harbor for purchases made pursuant to renovate-to-rent programs that bring neglected homes back into the housing supply and up to code; 
• Clarify the requirements for homeownership programs and programs to boost homeownership, including providing safe harbors for large institutional investors that provide meaningful financial support towards their renters’ purchase of a home; 
• Clarify that an entity is engaged “in the business of” investing in, owning, renting, managing, or holding single-family homes when it does so for the purpose of receiving income or financial gain, and not incidentally to a different business; 
• Define when an entity may qualify as a passive investor in another entity that owns a home because it does not share directors or officers with the other entity and does not have a property control right over the underlying homes; 
• Clarify certain purchases involving debts previously contracted, loss mitigation, and transfers between large institutional investors that protect the liquidity of the housing market; and 
• Clarify the calculation of the maximum civil penalty where a single prohibited purchase involves more than one large institutional investor.

A number of statutory obligations would have non-exclusive safe harbors under the proposed regulation. These include criteria for evaluating whether a home has undergone significant renovation under a renovate-to-rent program, whether a renter has benefited from significant financial assistance under specific homeownership programs, and whether a renter has been granted a 30-day first-look period and right of first refusal.

Treasury’s suggested strategy aims to provide clarity without needlessly interfering with the supply of housing, homebuilding, rehabilitation activities, or capital formation while acknowledging that housing-market participants employ a range of ownership, investment, construction, servicing, and property-management structures.

To read more about the initiative, click here.

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