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The Senate voted Tuesday to advance the 21st Century ROAD to Housing Act, a sweeping bipartisan package aimed at tackling the nation’s housing shortage and the most ambitious federal housing effort in generations. But a late addition targeting institutional investors is raising concerns from housing advocates and free-market conservatives alike.

On Tuesday, March 10, the Senate voted to advance the 21st Century ROAD to Housing Act, an expansive, bipartisan housing package that includes smart growth provisions. The legislative package includes a majority of the provisions from the ROAD to Housing Act and the lower chamber’s 21st Century Housing Act. This bill is the most ambitious piece of federal housing legislation in generations and would be a key step forward in addressing the national housing shortage. However, the text also includes a new Trump Administration request that restricts large institutional investors from buying up single-family homes. Housing groups are ringing alarm bells about this provision’s potential impact on housing supply, while conservative lawmakers have voiced concerns about its clash with free-market ideology.

These key smart growth provisions in the bill would support missing middle, affordable, and infill housing, helping to build more housing at the right place, type, and price:

• Unlocking Housing Supply Through Streamlined and Modernized Reviews Act (Section 208): This section modifies National Environmental Policy Act (NEPA) review for infill and small housing projects to reduce regulatory burdens and speed the development process.
• Accelerating Home Building Act (Section 211): This section would help communities cut through red tape and open new pathways for development by supporting community-driven efforts to create pre-reviewed building designs.
• Community Investment and Prosperity Act (Section 204): This section increases the Public Welfare Investment cap, which is intended to improve financial institutions’ capacity to invest in affordable housing.

Unfortunately, the bill dropped the following smart growth provisions from the prior two bills:

• The Housing Supply Frameworks Act (included in both the ROAD to Housing and Housing in the 21st Century Act), which would have directed HUD to create resources on zoning and best practices for local and state governments.
• Build More Housing Near Transit Act (included in ROAD to Housing, but dropped in the Housing in the 21st Century Act), which provides incentives for housing along transit corridors.
• Identifying Regulatory Barriers to Housing Supply Act (included in Housing in the 21st Century Act but not ROAD), which would require CDBG recipients to report to HUD on their progress towards adopting a series of pro-housing land use and zoning policies.

On March 2nd, the Banking Committee released the text of the 21st Century ROAD to Housing Act. This legislative package incorporates most of the Senate’s ROAD to Housing Act and housing provisions from the Housing for the 21st Century Act. The new combined housing package aims to boost housing supply through improving existing programs and reducing regulatory burdens. The text includes 36 of the 40 original Senate provisions and six provisions from the House’s version of the housing bill.

The pushback that Congress is facing is not about which provisions were left in or removed, but instead a new provision that the Trump Administration has requested. Trump first called for banning institutional investors from buying up single-family homes in early January. The Administration proposed that firms owning more than 100 single-family homes would be banned from buying additional properties. 21st Century ROAD’s Section 901, titled “Homes are for People, not Corporations,” includes significant restrictions on institutional investors, now defined as entities owning more than 350 homes. Section 901 largely focuses on single-family homes, defined as a home with two or fewer dwellings. Higher-density development, defined as three units and above, is exempt from the institutional purchase requirement and the 7-year disposal requirement. Notably, the provision’s disposal requirement would require institutional investors to sell single-family homes to individual buyers within 7 years, which would have a significant impact on the Build-to-Rent sector. This requirement could reduce interest in investment in Build to Rent, leading to reduced housing production, and if tenants were uninterested or unable to buy the properties, the provision could also lead to thousands of evictions.

Housing groups are calling for the provision to be removed or modified, given concerns about its impact on housing supply. Multiple groups representing the real estate industry sent a sign-on letter to the Senate expressing concern about limiting investment in housing and the potential for the provision to undermine housing production. Other housing groups like YIMBY Action are calling on Senate Banking Democrats to implement a very narrow amendment to Section 901 to protect the construction of Build-to-Rent developments. The amendment would limit Section 901’s dispositions requirement to areas where investors own 5% or more of the single-family housing stock, while maintaining the ban on investors buying existing properties. In areas where institutional investors collectively have a 5% investor market share, the bill’s 7-year disposition requirement would still apply. Housing advocates have noted that Build-to-Rent contributes to housing supply: In 2024, the BTR market produced 39,000 single-family rental properties (nearly 6 times as many as before the pandemic).

Beyond the advocacy organizations’ concerns with a portion of the Senate bill, the lower chamber is also voicing disapproval of the package. House Financial Services Chair French Hill said that the Senate bill needs to be altered to reflect the House’s needs and priorities. Republicans in the House are already expressing opposition to the so-called institutional investor ban, citing potential market volatility and concern about a departure from free-market ideology.

The Senate’s bipartisan housing package is positioned for final passage in the upper chamber next week. So far, the bill has overwhelmingly advanced through the Senate, but it could collapse by the time it reaches the House due to Republican opposition alone. The Senate still has a small window to revise the provision to address concerns both inside and outside of Congress in order to promote smart growth housing policies and make progress towards addressing our housing shortage.