EXCLUSIVE — Senate Banking Committee Chairman Tim Scott (R-SC) is defending a provision in bipartisan housing legislation that would ban large institutional investors from purchasing single-family homes, noting a number of carveouts and exceptions in the bill.
The White House has made such a ban a priority, and it was added to the legislative bill, which the Senate is expected to vote on this week. But one particular aspect of the ban has faced backlash from some conservatives and industry groups, namely that it would require investors who own build-to-rent homes, which are otherwise exempt from the ban, to sell those homes within seven years.
The Washington Examiner spoke to Scott, who authored the legislation with Sen. Elizabeth Warren (D-MA), during a Tuesday phone interview. He highlighted President Donald Trump’s desire for the ban to be a final legislation.
“I can say that the president’s priority on the large institutional investors came over from the White House, and what we’ve tried to do is work to massage some of it — and the seven-year provision is one of the areas that we actually have worked heavily on, trying to make it more digestible,” he said.
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The inclusion of the seven-year provision has rankled homebuilders, who argue that it would make investing in housing uneconomical and amount to a soft ban. The National Association of Home Builders, long a supporter of the bipartisan legislation, is threatening to withdraw its support for the bill, the 21st Century ROAD to Housing Act.
“As the Senate takes up debate on the housing package, we wanted to alert you that absent efforts to improve the institution investor provisions … to truly exempt built to rent construction, we plan to oppose the overall legislation and will consider designating a key vote in opposition,” the group told congressional offices last week.
Scott, though, defended the seven-year provision, noting that it comes with major caveats. He said that, for instance, if the large institutional investor is unable to sell the property within the first 60 days it is on the market, the seven-year provision no longer applies.
He also said it doesn’t apply to Real Estate Investment Trusts and “a number of other programs that are designed for home ownership as an outcome.”
“Additionally, it gives the Treasury more discretion that if any of these provisions seems to slow down the actual sale of houses, or to achieve the goal of more homeownership, the Treasury has within the discretion to eliminate and or use their discretion to [reduce the effect of] that provision,” the chairman said.
In addition to the NAHB, Sharon Wilson Geno, president of the National Multifamily Housing Council, dinged the language on build-to-rent in the legislation during an interview with the Washington Examiner last week.
“That really makes no sense, because … [the] build-to-rent space was supposed to be exempted from this bill, I think everybody understood that in some way, and they’re not built for sale,” Wilson Geno said. “They are only built as multifamily, and if we don’t treat them like multifamily, they’ll never be built.”
The overall legislation is designed to boost housing supply and help alleviate the housing crisis.
“Across the country, families are feeling the strain of rising housing costs and limited supply,” Scott said in a statement. “The 21st Century ROAD to Housing Act brings together real solutions to build more homes, reduce burdensome regulations, and expand opportunity for hardworking Americans.”
Generally speaking, the legislation is aimed at easing federal regulations that might slow housing construction and encouraging states and cities to reduce land-use regulations that are thought to make it difficult to build.
The legislation is a combination of the Senate’s ROAD to Housing Act and the House’s Housing for the 21st Century Act. The newest iteration of the legislation is the Senate’s attempt to reconcile the differences between the two bills before sending it back to the House.
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Other major changes include the deletion of one provision that would have directed more federal funding to localities that permit more housing near transit and another that would have essentially graded every state and city on their zoning laws.
Another major addition is that the bill would ban the Federal Reserve from issuing a central bank digital currency through 2030. Banning CBDCs, as they are known, has been a goal for conservatives worried about surveillance by the Fed.