Congress' Housing Bill Goes From Small Supply Booster to Housing Killer
The Senate's proposed inclusion of an effective ban on build-to-rent housing in a bipartisan housing bill could significantly shrink new home production.
Happy Tuesday, and welcome to Rent Free.
This week's newsletter includes a look at a new report from the California Fire Marshal that takes a bizarrely dim view on single-stair reform, despite its potential to increase both supply and safety.
But first, our lead story on how the baseless, bipartisan backlash to corporate ownership of single-family rental housing might convert the first major housing bill passed by Congress in nearly two decades from a modest pro-supply measure to a major housing killer.
The Senate Considers Killing Build-To-Rent Housing
For over a year now, Congress has been working on passing a bipartisan housing bill full of small policy tweaks and regulatory reforms aimed at boosting home construction in the country.
But any increase in housing production the legislation might spark is now at risk thanks to the last-minute inclusion of an effective ban on build-to-rent housing, which could reduce single-family home construction by as much as 10 percent each year.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
As this newsletter goes to press, the Senate is scheduled to vote on whether to advance the housing legislation with the effective build-to-rent ban included this afternoon. Its inclusion has sparked new opposition to the bill that has, heretofore, been moving surprisingly smoothly through the legislative process.
Activists are now scrambling to get amendments included in the legislation that either eliminate or soften the restrictions on build-to-rent housing.
"Build-to-rent housing meets an important and growing demand, and we should not discourage the construction of new homes that are so critical to solving our affordability crisis," reads an emailed letter signed by a long list of YIMBY ("yes in my backyard") groups that was circulated yesterday.
In the past several years, new single-family subdivisions purpose-built as rental housing have gone from a rounding error of the new home market to comprising anywhere from 3 percent to 10 percent of new home production.
Research firm John Burns Research & Consulting counts 500,000 build-to-rent homes in its database, plus another 160,000 such homes in the development pipeline.
But because build-to-rent housing is financed and owned by large investors, it's being caught in the crosshairs of the growing bipartisan chorus that objects to corporate ownership of single-family rental housing.
Anger at Wall Street's alleged practice of purchasing homes out from under individual families, thus condemning would-be owner-occupiers to a life of renting, has been growing for years.
Despite large institutional investors owning less than 1 percent of single-family homes and being net sellers of single-family homes in recent years, politicians of both major parties have called for banning their activity.
In January, President Donald Trump issued an executive order instructing federal departments to do what they can to block large investors from buying single-family homes. The president demanded that Congress codify its own ban on corporate home purchases during his State of the Union address.
While this backlash has been building, Congress has quietly also been beavering away at legislation that would make a lot of wonky changes to existing housing regulations and programs, with many of those changes aimed at encouraging local and state governments to liberalize their land-use laws.
Last July, the Senate Banking Committee, led by Chairman Tim Scott (R–S.C.) and ranking member Elizabeth Warren (D–Mass.), released the ROAD to Housing Act.
As a 315-page amalgam of different policies, the bill is a little difficult to summarize.
In terms of pro-supply provisions, it would have redistributed grant funding from high-cost jurisdictions that don't build much housing to those that do, repealed cost-increasing regulations on manufactured homes, exempted federally funded housing projects from onerous environmental reviews, and rewarded jurisdictions that liberalize their land-use laws with additional federal funds.
The bill passed unanimously out of the Senate Banking Committee and was later approved by the full Senate as part of last year's National Defense Authorization Act.
Ultimately, the House did not take up that bill. But it did pass its own substantially similar piece of legislation, the Housing for the 21st Century Act, in February by an overwhelming 390–9 vote.
Hopes were high that the two chambers could quickly come together on a rare piece of bipartisan legislation that includes a number of deregulatory tweaks.
Late last week, Scott and Warren dashed those hopes when they unveiled their amendments to the House bill. Most of those amendments involved inserting policies from the ROAD to Housing Act, particularly policies about adding pro-growth strings to federal grants, into the House's legislation.
But a new section added by the senators, titled "Homes are for people, not corporations," would severely restrict institutional investors' activity in the single-family market.
This new section would prohibit investors who own more than 350 single-family homes from acquiring new ones. Investors would also have to sell off any new build-to-rent housing they own within a period of seven years to individual homeowners.
Industry advocates say that the seven-year disposal requirement amounts to an effective ban on build-to-rent housing.
"The way build-to-rent works isn't really like single-family housing. It is financed like one development. They are not set up like individual homes. They are set up like group homes with group amenities," says Sharon Wilson Géno of the National Multifamily Housing Council (NMHC).
Requiring investors to sell off these purpose-built rental communities to individual buyers would see investors just exit the market, Géno tells Reason.
"It's pretty clear that a lot of senators had no idea that this was inserted in the dead of night without anybody's knowledge," she adds.
On a call with housing activists yesterday, Paul Williams of the Center for Public Enterprise said that the institutional investor crackdown was inserted into the bill to ensure its quick passage when it goes back to the House.
There's still lingering disagreement between the two chambers about the reform proposals in the Senate bill that would amend federal grant programs to shift more dollars to high-growth jurisdictions.
According to Williams, the thinking among some senators was that the inclusion of a corporate buyer crackdown that the administration wants, and which is popular on both sides of the aisle, would prevent the need for a legislative conference where representatives would be able to strip out those grant provisions.
Provided that is the maneuver, it seems to have backfired both politically and practically.
On the practical side, an effective build-to-rent ban will almost certainly destroy more new homes than all of the pro-supply tweaks in the bill will create. If the goal of the legislation is to increase home production, its current form would do the opposite.
Politically, the institutional investor crackdown seems to have largely just attracted opposition to a bill with large bipartisan support.
Sen. Rand Paul (R–Ky.), who has not been particularly active on this bill, issued a lengthy post on X opposing the Senate's amended legislation because of its investor crackdown.
— Rand Paul (@RandPaul) March 9, 2026
Likewise, the NMHC and the National Association of Home Builders are both now criticizing the legislation.
Pro-housing groups who've been working on the bill, and its subcomponents, for years are urging its passage with changes to protect build-to-rent housing, even if some restrictions on large investors are still included.
Free market wonks have made a number of criticisms of the Senate and House housing bills as they've wound through the legislative process, mostly on federalism grounds. Housing policy should be left to states and localities, and the federal government should not try to influence it one way or another.
The possible inclusion of the effective build-to-rent ban in the Senate's bill highlights the merits of that critique. A federal bill that might have had a positive pro-supply influence on state and local policies has now become a vehicle for destroying home production nationwide.
California Single-Stair Report Posits False Trade-Off Between Supply and Safety
Most states require that residential buildings taller than three stories be built with two staircases as a fire safety measure.
Critics of that requirement argue that two staircases do little to improve fire safety while making it infeasible to fit smaller apartment buildings on smaller lots.
In states across the country, reformers have been pushing for changes to building codes that would allow taller buildings to be built with only a single stair. That's run into opposition primarily from firefighters, who worry about the safety consequences of reform.
Those tensions were on full display in a study released last week by California's Office of the State Fire Marshal.
The report was required by a 2023 bill that mandated the fire marshal to convene a study group of building code experts and fire safety officials to look at single-stair reform.
Their final product does recommend allowing single-stair buildings to rise an additional story. However, that recommendation is buried deep in the report and couched in language that paints a very dim view of single-stair reform.
While sprinkler systems, smoke detectors, and noncombustible materials have improved fire safety in single-stair buildings, these measures "do not fully substitute for the redundancy of two independent stairways" reads the report, noting the near-unanimous opposition of fire officials to single-stair reform.
"Potential savings from eliminating a stairwell need to be compared against the safety risks posed to occupants and responders, as well as by the broader public costs of diminished resilience in emergencies," it continues.
Alex Horowitz, a researcher at Pew, says that single-stair reform can actually enhance fire safety by enabling the construction of more modern multifamily buildings, which are the safest form of housing.
Last year, Pew produced a lengthy study on single-stair buildings that included an individualized look at all fire deaths in Seattle and New York, the cities with the most single-stair apartments, going back 12 years.
"Not a single fire death in either city attributable to the lack of a second stair in their thousands of one-stair buildings," says Horowitz.
He says that modern multifamily buildings, of both the two- and one-stairway variety, are safer than older apartment housing and even newer single-family housing because they incorporate newer safety features and are built from noncombustible materials.
Because single-stair buildings are also smaller on average than two-stair buildings, they take less time to evacuate, which makes them safer still, he says, citing a study commissioned by Minnesota on single-stair reform that was much more favorable to the idea.
Allowing single-stair buildings to rise higher would make more apartment developments financially feasible. That means more people would be living in the safest form of housing, says Horowitz, arguing that's win-win for supply and safety.
Quick Links
- The Oregon Legislature has approved a bill requiring that jurisdictions fully "fund" their inclusionary zoning requirements. You can read my own lukewarm assessment of the idea here.
- Further south, the Pacific Legal Foundation is challenging the constitutionality of San Luis Obispo, California's inclusionary zoning requirements.
- Reason on New York City Mayor Zohran Mamdani's "rental ripoff" hearings.
- Another supply-side success story.
It's actually never been cheaper to rent in Austin, TX.
The Rent/Income ratio across the metro has dropped to 18.3% - the lowest on record (going back at least 20 years).
Landlords are aggressively cutting rents at a time when incomes in Austin keep rising.
The typical rent is… pic.twitter.com/sVnNoJJhWY
— Nick Gerli (@nickgerli1) March 8, 2026
