Lawmakers Seek To Reduce Corporate Landlords

Corporate landlords
A recent bill introduced in the Senate aims to curb corporate landlords.

It is estimated that renters occupy 15.9 million homes with corporate landlords owning about 3% of them. In fact, the 10 biggest institutional investors owned more than 430,000 single-family rental homes at the end of 2023. Of course, many of these homes are located right here in The Sunshine State.

For many Americans, the dream of homeownership feels increasingly out of reach. One factor blamed for this is the rise of institutional investors, particularly hedge funds, snapping up single-family homes. Enter the End Hedge Fund Control of American Homes Act, a recent piece of legislation aiming to curb this trend.

What does the Act do to address corporate landlords?

Introduced in December 2023 by Senator Jeff Merkley, the Act takes a two-pronged approach to curb the influence of hedge funds and other large investors in the single-family home market:

  • Gradual Divestiture: The Act mandates that hedge funds gradually sell off their existing stock of single-family homes. Over a ten-year period, they’d be required to divest at least 10% of their holdings annually, prioritizing sales to families.
  • Disincentivizing Future Purchases: A hefty tax penalty is slapped on investors who own more than a set number of single-family homes. This penalty would increase over time, effectively discouraging future large-scale acquisitions. Revenue collected from these penalties would be directed towards down-payment assistance programs for aspiring homeowners.

The Rationale behind the Act

Proponents of the Act argue that large-scale investment firms are driving up housing prices. With their deep pockets, they can outbid individual buyers, reducing available inventory and squeezing out potential first-time homeowners. Additionally, critics argue that these investors are more likely to prioritize short-term profits over long-term maintenance, potentially leading to neighborhood decline.

Summary

As of July 2024, the Act has been introduced in both the Senate and House of Representatives but hasn’t been passed into law yet. It’s important to note that the road to becoming law can be long and winding, with plenty of debate and potential amendments along the way.

The End Hedge Fund Control of American Homes Act is a significant piece of legislation with the potential to reshape the housing market. Whether it becomes law and achieves its intended effects remains to be seen. However, it certainly sparks a crucial conversation about affordability, access, and the role of large investors in the American dream of homeownership.

Are you thinking about buying or selling real estate in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.