A proposed federal crackdown on institutional ownership of single-family rentals is already causing major disruption in the build-to-rent (BTR) market, with roughly 6,000 units delayed or canceled as developers pause to reassess risk, according to a recent ResiClub survey.
The survey, conducted between April and May and sent to 14 large operators and institutional owners with at least 100 single-family rentals, highlights growing uncertainty around proposed housing legislation.
The “21st Century Road to Housing Act,” passed by the U.S. Senate, aims to address the housing shortage by limiting institutional investors. It would prohibit entities owning 350 or more single-family rental homes from acquiring additional properties and, in some cases, require divestment after seven years. Supporters argue the measure would increase access for individual homebuyers by reducing investor competition.
However, the proposal faces strong opposition from industry groups such as the National Association of Home Builders and the National Apartment Association, along with a bipartisan coalition of lawmakers who warn it could significantly reduce future build-to-rent development.
According to the survey results, 80% of firms say market conditions have worsened over the past six months due to regulatory uncertainty, and about 70% view the risk level for institutional investment in single-family rentals as high. Overall, 90% expect the legislation would reduce housing supply to some degree.
The uncertainty is already affecting decisions: 70% of respondents report that plans for acquisitions or development have been disrupted or halted, and only 30% expect to increase their SFR exposure over the next year. Many firms also indicated they may shift capital elsewhere, with 80% saying they would redirect investments into other asset classes such as offices, data centers, student housing, or multifamily projects if restrictions tighten.
A competing House bill would take a more permissive approach, allowing institutional investors to continue building and holding rental homes without forced divestment rules, but the two chambers have yet to reconcile their differences.
Build-to-rent activity peaked in Q2 2022 at 3.1% of home purchases, but has since fallen to about 1% amid higher interest rates and shifting capital markets.
Source: GlobeSt
