Senate-Passed Housing Bill Returns to House for Further Consideration

The U.S. Senate on March 12, 2026, passed its version of the 21st Century ROAD to Housing Act (H.R. 6644) by a vote of 89-10. The bill now returns to the U.S. House of Representatives for further consideration.

One provision in the Senate-passed bill that has raised significant concerns from homebuilders and other housing providers is Section 901. That section restricts "large institutional investors" (LII) from purchasing single-family homes (SFH) and mandates divestment of certain homes acquired after the bill's enactment.

Senate consideration comes on the heels of President Donald Trump signing an executive order (EO) on January 20, 2026, that targeted institutional investors' ability to buy SFHs. The EO directed federal agencies with programs to incentivize home ownership – such as the U.S. Departments of Agriculture, Housing and Urban Development, and Veterans Affairs, as well as the Federal Housing Finance Agency – to refrain from providing government programmatic support to – or entering into transactions that involve – the sale of SFHs to LIIs. The stated goal of the EO was to eliminate competition between investors and families with respect to home purchases, though the data shows institutional investors own a small percentage of such homes nationwide. The Senate bill goes much further than the president's stated policy objective. This Holland & Knight alert will discuss Section 901 and its impact on housing.

General Prohibition and Exceptions

Section 901(b) contains a general prohibition to prevent LIIs from engaging in the "purchase," whether directly or indirectly, of any SFH.¹ There are two exceptions to the general prohibition. The first allows acquisition if the home is acquired under one of the bill's "excepted purchase" categories, but in certain cases, such a home may later be subject to forced divestment within seven years of the original purchase. The second is a purchase related to a business restructuring or reorganization.²

Key Definitions

To fully understand the scope of the general prohibition, it is important to understand how certain terms are defined.

• Large Institutional Investor. An LII is defined broadly and includes any type of for-profit entity or business arrangement "engaged [in] the business of investing in, owning, renting, managing or holding single-family homes" if they do so "beginning after the date of enactment" and "directly or indirectly ha[ve] investment control of not less than 350 single-family homes in the aggregate, not including any single family purchased in an excepted purchase made after."³ Nonprofits and government entities, however, are not included in the definition of an LII.
• Single-Family Home. An SFH is defined as a "structure that contains 2 or fewer dwelling units that are each intended for residential occupancy by a single household" but does not include a manufactured home, as defined under federal law.⁴ Included within the SFH definition are duplexes, whereas structures with three or more attached dwelling units (triplexes or more-plexes) are not regulated by Section 901.
• Purchase. "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".⁵ Notably, this prohibition is written to preclude an LII from buying vacant land and constructing new homes for the purpose of adding those homes to the housing supply as rentals. Though the president's EO and administration's messaging supporting the policy focused on limiting competition between LIIs and individual homebuyers as to the purchase of existing homes, the Senate bill goes much further and, as nearly every major housing construction association has complained, may disincentivize rental home construction that would otherwise add to the overall housing supply and expand local tax bases.

This outcome could prove counterproductive to the White House's stated objective. Though the White House has stated it wants to promote home ownership and the president has discussed the need to make housing more affordable, according to the Urban Institute, Section 901 would "undermine an increasingly promising source for rental supply: the build-to-rent business." The Urban Institute has also stated this prohibition "could lead to proposals that make housing affordability worse than it is now."

• Excepted Purchase. The bill contains 11 different exceptions to the general prohibition, defined as an "excepted purchase."⁶ Four major purchase categories include SFHs that are 1) newly constructed, newly renovated or a rental conversion for sale, 2) newly constructed and purchased by an LII as part of a build-to-rent program, regardless of whether the SFH is part of an entire community of renter-occupied properties or a mix of renter-occupied and owner-occupied properties, 3) part of a renovate-to-rent program where the SFH has been "substantially" rehabilitated, and 4) newly constructed, renovated or a rental conversion where the SFH is intended and operated for a household with at least one person age 55 or older.

Divestment Considerations

As a general matter, the bill contains a grandfather clause so that an LII is not required to sell any SFH housing stock owned at the time of the bill's enactment. For each of the four types of excepted purchases listed above, however, though the bill allows their purchase, it also mandates the LII to divest. Homes purchased under one of the first three categories listed above must be divested within seven years of the initial purchase. Under the fourth category, homes must be sold within seven years if the property ever ceases to be used as senior housing. A subsequent sale to another LII does not reset the seven-year divestment clock.

An LII that does not sell an SFH subject to divestment within the period required by the bill is subject to civil penalties equal to the greater of $1 million or three times the property's purchase price. The bill establishes a process for divestment that includes giving the renter a 30-day option to purchase the SFH before it can be sold to a third party. The bill also contains a safe harbor so that if, after following the complex divestment procedures required by the bill, the LII is unable to sell the SFH, then the LII will be deemed to be compliant with the divestment requirements.

The bill's divestment provisions provide for a tightly proscribed divestment process:

• These include requirements that the LII provide the current renter with a 30-day first-look period to purchase the SFH before the LII can list it for sale or sell to a third party. Should the renter decline the offer to purchase, the bill does not allow for any delay by the LII in listing the SFH – under the bill's terms, the SFH must be listed for sale on the same date the renter declines to purchase.
• The bill provides that the SFH must be "free to access" during the period it is listed for sale. This construct ignores the fact that the current renter will likely still be in possession and may have rights guaranteed under the lease in terms of if, or when, showings can occur during the tenancy.
• Though permissive in nature, one provision of the bill references potential listing of a SFH subject to divestment on a "national Multiple Listing Service" (MLS). There is no such thing. An MLS is local in nature, typically operated by a local board of realtors.
• The bill provides a safe harbor for an LII that takes each step required by the bill if it us unable to sell the SFH or if "no offer to purchase is made … within 60 days" of the SFH being advertised for sale – in which case, the LII will "considered to be in compliance with the disposal requirements," allowing the LII to avoid the bill's civil penalties. Notably, this safe harbor does not require an offer to be at fair market value (FMV). This could create a negotiating disparity that favor buyers who understand that making an offer, even one far below FMV, would cause the LII to lose out on the availability of the safe harbor. LIIs who receive such offers may find accepting below-market offers is preferable to the civil penalties they would otherwise face.

Senate Efforts to Fix the Bill

During Senate consideration, several amendments were filed to perfect the bill. These amendments sought to permit build-to-rent; however, they never received a vote in the Senate.

What Does the Path Forward Look Like?

House Republican leadership and other members of the majority have indicated opposition to Section 901. Changes the House might consider making include striking Section 901 from the bill in its entirety, modifying the bill to create a new category of "excepted purchase" to expressly permit the development of "build-to-rent" SFHs on a contiguous parcel of land or striking the term "construction" from the definition of "purchase."

Holland & Knight's Public Policy & Regulation Group will continue to monitor this legislation as it progresses through the House. For more information or questions, please contact the authors.

Notes

¹ See text beginning on page 288, line 22 of the Senate-passed bill.

² See text beginning on page 289, line 4 of the Senate-passed bill.

³ See text beginning on page 286, line 18 of the Senate-passed bill (Section 901(a)(4)).

⁴ See text beginning on page 286, line 9 of the Senate-passed bill (Section 901(a)(3)).

⁵ See text beginning on page 288, line 17 of the Senate-passed bill (Section 901(a)(5)).

⁶ See text beginning on page 282, line 12 of the Senate-passed bill (Section 901(a)(2)).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.