Treasury proposes rules limiting large home investors

The U.S. Treasury Department has proposed regulations to implement a congressional restriction on large institutional investors buying additional single-family homes, while defining purchases that could remain exempt. The proposal is not final, and the restriction is scheduled to take effect January 7, 2027. The 21st Century ROAD to Housing Act, which became law in July, covers investors with direct or indirect control over at least 350 single-family homes. Under the law, those investors generally may not purchase more single-family homes, subject to exceptions. Treasury’s proposal would define how those exceptions apply and clarify the rules’ scope. The proposed exemptions include build-to-rent projects, homes bought for substantial renovation and rental, and certain homeownership programs. Treasury’s proposal describes qualifying build-to-rent homes as new single-family houses that have not previously been owned by an owner-occupier, are purchased within 18 months of receiving a certificate of occupancy and are occupied by a renter. For qualifying renovation-to-rent homes, one provision requires investors to spend at least 15% of the purchase price on improvements. The...