House and Senate Clash Over BTR Provision in Landmark ROAD to Housing Act

A landmark housing bill that the U.S. Senate passed this week faces an uncertain future in the House of Representatives due to a clause that could change the face of the multifamily industry, and as a result has generated fierce pushback from the real estate lobby. 

On Tuesday, in a rare bipartisan 89-10 vote, the Senate passed the 21st Century ROAD to Housing Act, a landmark piece of legislation that brought Democrats and Republicans together as the nation seeks to address the housing affordability and supply crisis. 

Co-sponsored by Sen. Elizabeth Warren (D-Mass.) and Sen. Tim Scott (R-S.C.), the ROAD to Housing Act aims to cut federal regulations related to building market-rate housing and spur affordable housing production through new grants to local governments. ROAD stands for “renewing opportunity in the American Dream.”

Zillow estimated the nation’s housing shortage hit an all-time high of 4.7 million units in July 2025. 

The housing bill’s most significant provision attempts to confront the surge of institutional investor ownership of residential housing by mostly banning large institutional investors like Blackstone and Invitation Homes from competing with traditional buyers for the purchase of existing single-family homes across the U.S. 

Law firm Latham & Watkins said the legislation “would represent the most significant federal restriction on institutional investment in single-family housing in modern U.S. history.”

At 14.2 million homes, single-family rentals (SFRs) account for the second-largest rental housing type in the U.S, after traditional multifamily, and represent nearly one-third of all American households, per the U.S. Census Bureau.

Sen. Scott, the Senate Banking Committee chairman, told the press last week that the ban on single-family investors was critical in receiving White House support for the legislation, as it is a direct response to President Donald Trump’s Jan. 20 executive order banning large investors from that space. 

But the bill’s requirement that companies which own or operate 350 or more single-family homes must divest within seven years or face onerous financial penalties has gotten the attention of the real estate industry. The provision has also drawn pushback from lawmakers in the House, after eliciting fears that it could have dire consequences across the multifamily and build-to-rent space.

This month, 42 industry groups — which include the Mortgage Bankers Association, the Real Estate Roundtable, the National Apartment Association and the National Multifamily Housing Council — called on the House of Representatives to amend language concerning single-family home ownership. 

Their concerns are that the bill, as written, would blow up the entire build-to-rent side of multifamily by requiring BTR developers (and their investors) who own and operate at scale to sell out of their housing communities within seven years of construction or renovation.

“The seven-year disposition requirement will effectively shut down BTR development, leading to less supply and fewer options for renters,” the letter states. “BTR is underwritten, financed and constructed as multifamily housing. It is not possible to sell individual units as single-family homes, which is what the Senate proposal would require.”

The provision was not in the House version of the bill that passed in February with a 390-9 vote. 

Sen. Brian Schatz (D-Hawaii), the lone Democrat to vote against the legislation in the Senate, said the seven-year sell-off requirement would limit the ability of developers to use the Low-Income Housing Tax Credit, which normally lasts 30 years as an abatement. 

“What does this mean? It means all these LIHTC projects are going to die,” said Schatz, who added the bill was poorly written by the Senate. “It was written in such a way that it was trying to capture the hedge fund problem, but they wrote it wrong.”

Brian Pascus can be reached at bpascus@commercialobserver.com.