Sen. Raphael Warnock's proposal to stop large private equity firms from buying additional single-family homes just became federal law without a presidential signature.
Warnock said that the measure is part of the 21st Century ROAD to Housing Act, which became law after Trump failed to sign nor veto the legislation within the constitutionally required 10day window.
The legislation also includes measures to increase housing supply, expand rural housing programs and encourage local governments to build more housing. It also incorporates Warnock's Appraisal Modernization Act, which aims to improve fairness in the appraisal process.
Private equity firms have become some of the country’s biggest corporate landlords with the firms and large institutional investors owning about 3.8% of the national single-family rental stock (roughly 300,000 to 500,000 houses) though in certain booming metro areas, this can spike to around 10% to 13%. In the multi-family sector, they are a much larger presence, owning at least 11,800 apartment buildings representing nearly 3 million units, or about 13% of all U.S. apartment units, according to house.gov. Private equity owns roughly 1 in every 8 apartment units across the country, with more than two-thirds of all private equity-owned apartments are in 10 states, with Texas alone having the most—nearly 580,000 units. Housing advocates have argued that private equity firms can outbid families with cash offers, reducing the number of homes available to first-time buyers while contributing to rising home prices and rents. Warnock has said corporate investors increasingly treat homes as financial assets rather than places for families to live.
Corporations that break these rules face heavy penalties, including massive fines of either $1 million or three times the purchase price of the home, with every dollar collected from these fines will be reinvested directly into local communities to fund new housing construction and provide financial assistance for first-time homebuyers.