Beyond the headlines: A definitive update on the SFR policy discussion

This is not the first time the Single Family Rental (SFR) industry has faced legislative threats. The Stop Wall Street Landlords Act, End Hedge Fund Control of American Homes Act, and HOPE for Homeownership Act have all tried but failed to address the issue of institutional investment in the BTR/SFR space.

But the 21st Century ROAD to Housing Act is the first consequential piece of legislation targeting the sector that could realistically be signed into law.

What is unique in this instance is that neither the original House nor Senate housing bills contemplated the SFR/BTR provisions until President Trump raised the issue in his January 7 Truth Social post and in his January 20 Executive Order.

Furthermore, the bill's coalition runs across an unusual ideological axis: the urban progressive wing of the Democratic Party and the rural populist wing of the Republican Party.

This has made it harder to lobby along the usual political channels.

At the IMN Single Family Rental East conference this May in Miami Beach, Florida, John Isakson, CEO of Ark Homes For Rent, a key advocate for the industry, delivered an update on the legislation and its impacts.

The perception problem

According to Isakson, policymakers have been trying to tackle the issue of institutional investors owning SFR for the better part of the last decade. But they are trying to tackle a problem that no longer exists; it’s “a solution looking for a problem”, he said. The real issue here was perception, and perception is reality.

“Wall Street buying a lot of homes off the MLS and from single-family homeowners and turning them into rentals, if you look at the statistics today, that's just not happening,” he said, adding that it’s an issue that “polls well”.

Subsequent to the conference, the House passed the amended bill 396–13, a wider margin than even Isakson had predicted. It now sits in the Senate. It’s his opinion that the White House will urge the Senate to pass it.

“The president is facing significant headwinds in the midterm elections. If the votes were held today, the House would go back to the Democrats by a wide enough margin to be concerning. The White House is very much looking for a win on affordability and on domestic policy, and this would be that.”

The current wording provides three important gains for the industry: the exemption to BTR, the removal of the seven-year forced-sale provision, and clarification on the definition of a single-family home.

This would allow the industry to create new supply in the single-family rental and build-to-rent markets, said Isakson. “It's a game-changer for lenders and investors. It's what will turn the spigots back on and get capital flowing back into the space.”

The 350-home threshold investor ban, which prevents institutional investors who own 350 or more single-family homes from purchasing additional properties, was largely irrelevant. "If you take the largest players in the industry today, last year Invitation Homes built 1,900 homes, sold 1,700 homes, bought 41," Isakson told the conference.

A call to arms

Isakson remained confident that the Senate would pass the legislation largely as is this summer and that we wouldn’t see further federal legislative efforts. But in certain states, the issues would continue due to the absence of a preemption clause. This would keep industry advocates on their toes.

Isakson predicts that red states will not pursue the issue, assuming President Trump is vocally supportive of the bill, but blue states may be encouraged to go further. He specifically named Indiana, Washington, Oregon, and Nevada as states where the industry has had problems in the past.

“It's going to be an issue, and we're gonna continue to have to fight those battles”, he said.

To fight those battles, Isakson noted that the industry has become much more organised.

“I'm one of the folks who's trying to help fund the PAC that the NRHC has that would serve both federal and state level interests.

“What the NRHC has also done is start state chapters. In Georgia, we've done a really good job of getting all the home builders, BTR folks, SFR folks, and presenting one voice to the legislatures, and I think that's really important.

“We've got to have one voice. It's got to be thoughtful. It's got to be articulate, and it's got to address the issues that these legislators have on their mind.

“We can't always just talk about what we want to talk about and what's important to us. We've got to counter the arguments out there in the ether, even if they're not what's actually going on.”

The SFR industry is at a pivotal moment, balancing uncertainty with innovation and resilience. Continue this vital dialogue and collaborate on actionable solutions at the Build-to-Rent Fall Forum this September in Dallas. Let’s shape the future of housing together and ensure the continued growth and success of the BTR and SFR sectors!