Trump Cuts Red Tape
Plus: An effective build-to-rent ban advances in Congress and Florida expands one of the country's most successful zoning reforms.
Happy Tuesday, and welcome to another edition of Rent Free. This week's newsletter includes stories on:
- The Trump administration's new executive order aimed at driving down housing construction costs.
- The latest on the effective ban on build-to-rent housing moving through Congress.
- Florida expanding one of the country's most successful zoning reforms.
Trump Issues Housing Affordability Executive Order
This past Friday, President Donald Trump issued an executive order aimed at reducing barriers to affordable housing construction.
"Layers of unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government have delayed construction, restricted development, and driven up the costs of new housing….It is the policy of my Administration to reduce regulatory barriers to building homes and to steward taxpayer dollars in a manner that promotes housing affordability," reads the president's order.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
The order calls on federal agencies to pare back federal energy efficiency mandates and environmental regulations, streamline environmental and historic preservation processes where they intersect with housing and housing-serving infrastructure, and publish local and state best regulatory practices.
In contrast to some of the housing supply orders and white papers issued by the Biden administration, there's little to no mention of enabling more infill development in "high-opportunity" areas.
The general thrust of the order is to pare back federal rules that drive up the cost and delivery time of new single-family, greenfield (or, if you prefer, sprawl) development, particularly environmental rules and permitting requirements.
"These are areas that the federal government actually controls and which rolling back can actually have a material impact on housing costs," says the Manhattan Institute's Judge Glock, highlighting the administration's proposed streamlining of stormwater regulations as a potential major source of construction cost savings.
Through the Environmental Protection Agency (EPA), the federal government requires developments that disturb an acre or more of land to obtain construction permits that come with a long list of regulations intended to reduce pollution from stormwater runoff.
The regulations themselves, which can include requirements for detention ponds and silt fences, raise construction costs.
The EPA's stormwater requirements have also encouraged local governments to impose limits on "impervious cover," which can raise development costs more by requiring builders to consume more land.
Trump's executive order directs the EPA to streamline its stormwater rules. It also calls for paring back Clean Water Act rules about discharges into alleged "wetlands," over which there's already been endless litigation and multiple Supreme Court decisions.
The order also directs the administration to reform or remove energy-efficiency and water-use requirements for federally financed manufactured housing projects that were adopted by the Biden administration.
A U.S. district court in Texas already stayed enforcement of those rules earlier this month, in a lawsuit brought by several Republican states and housing associations.
The Trump administration's executive order also calls for executive agencies to create more categorical exemptions to the National Environmental Policy Act (NEPA) for both housing projects and infrastructure such as roads and sewer systems that service new housing.
NEPA can require lengthy yearslong studies of federally funded projects or federal approvals of private projects. Critics have long charged that NEPA studies do little to protect the environment but do add enormous time and expense to projects that fall under the scope of the law.
Similarly, Trump's executive order calls for streamlining historical preservation reviews, which likewise can add considerable time to federally approved or funded projects.
How much the executive branch can pare back NEPA and historic preservation unilaterally remains to be seen. Presidential administrations are fond of issuing NEPA review page and time limits, only to be sued and have their streamlining thrown out by the courts.
The executive order also includes a directive to federal housing officials to publish best practices to promote housing affordability. It gives examples of by-right approval of single-family housing, allowing private inspections, and the elimination of green building practices and urban growth boundaries.
Senate Overwhelmingly Approves Housing Bill With Ban on Large Investor Home Purchases
This past Thursday, the U.S. Senate, in an overwhelming 89–10 vote, approved a housing bill that includes a number of pro-supply reforms and, most controversially, a ban on large investor purchases of single-family homes that will cost new housing supply.
As written, the bill prohibits large investors, defined as owning 350 or more single-family homes, from purchasing new single-family properties, save for a few narrow exceptions.
Those exceptions include build-to-rent housing: single-family communities purpose-built as rental housing. Nevertheless, the Senate bill would require large investors to sell any build-to-rent properties after seven years to individual owners.
Build-to-rent single-family housing has gone from a negligible part of the market to comprising anywhere from 3–10 percent of new single-family homes built each year in the country.
Industry advocates argue that any requirement that large investors offload their build-to-rent properties to individual owners amounts to an effective ban.
Build-to-rent developments are typically built on a single legal parcel of land and feature shared amenities, all of which make them more similar to an apartment building than a typical for-sale subdivision and thus very difficult, if not impossible, to divide into single-family properties.
A recent research brief from the American Enterprise Institute (AEI) found that 170,191 build-to-rent units were located on just 1,258 properties.
Because local lot division processes are often lengthy, expensive, and discretionary, many investors will likely just skip building build-to-rent housing altogether.
It's not immediately clear how many new homes will be lost to the Senate's forced divestiture requirements.
There are currently 160,000 build-to-rent homes in the development pipeline. Some percentage of those units will plausibly be reconceived as build-to-sell housing.
But the aforementioned AEI research brief argues it will not be a one-to-one conversion of build-to-rent to build-to-sell units, as build-to-rent developments appear better able to receive approvals from local land-use authorities.
The Senate bill exempts manufactured housing built to federal building standards from the forced divestiture requirements, while also easing federal regulations on manufactured housing.
That could enable some build-to-rent projects to go forward using newly deregulated manufactured housing construction methods. (That is to say, the homes would be built in factories as opposed to on-site.)
How many depends on how valuable the changes to federal manufactured housing regulations are, how able these units are to replace traditional site-built construction, and how much capacity the manufactured housing sector—which is responsible for 9 percent of new single-family home starts—has to meet the demands of the build-to-rent sector.
Certainly, less housing will be built under the Senate's current bill than under a different piece of legislation that deregulates manufactured housing and does not impose additional restrictions on build-to-rent communities or large investors.
The 10 "no" votes on the bill in the Senate were all Republicans, save for Sen. Brian Schatz (D–Hawaii), who has long been an advocate for federal policies to increase housing supply. He said on the Senate floor that his "no" vote was motivated by the threat the bill posed to build-to-rent housing.
What happens to the Senate's bill now that it returns to the House is an open question.
Rep. French Hill (R–Ark.), who wrote the original bill that the Senate amended to include the effective build-to-rent ban, said that the House will want to make its own changes to the Senate legislation.
"It is critical we get the details right and mitigate some of the concerns raised by House members with the Senate bill," Hill said in an emailed press release.
Indeed, some House members have expressed opposition to the large investor restrictions, as well as the Senate's removal of community banking regulatory changes prized by the House. The Senate bill also includes new federal grant programs that some Republican House members do not like.
All of that could hold up the bill, particularly in an election year, or lead to major amendments to it.
On the flip side, the White House has consistently said that it supports the Senate bill as is and is reportedly urging the House to give its approval to the legislation.
Trump has repeatedly called on Congress to ban large investor purchases of homes. He issued an executive order to that effect back in January.
That order did include an explicit carve-out for build-to-rent housing. But housing advocates say the White House is happy with the Senate bill and not interested in pushing for greater protections for build-to-rent housing.
Time will tell if the administration's stance is enough to convince House Republicans to pass a housing supply bill that includes a major anti-supply component.
Florida Lives Even More Local
Florida's Live Local Act, a law passed in 2023 to enable multifamily development in commercial and industrial areas, has proved a surprise success.
Since its passage, the Florida Housing Coalition estimates that projects totaling some 55,000 units have made use of the law's zoning relief and tax breaks. That makes it one of the most productive zoning reforms ever passed.
While surprisingly successful zoning reforms can often lead legislatures to backtrack, Florida lawmakers are instead expanding the Live Local Act's regulatory streamlining.
A bill passed by the Legislature last week would allow religious institutions to build Live Local projects on their land, provided the land has hosted a public house of worship for the past 10 years, and that the house of worship continues to operate following the new development.
The bill also places more restrictions on the ability of counties to apply height limits and setback requirements to Live Local projects.
Quick Links
- The New Hampshire House has approved a bill that allows home day care businesses to operate by-right in residential zones. Child care facilities are also allowed to operate by-right in commercial areas under the newly passed bill.
- The New York Legislature is considering a long list of property tax increases and "mansion tax" surcharges to help cover New York City's budget gap.
- An economic analysis of Massachusetts' rent control ballot initiative finds that the proposed law could wipe out $300 billion in property values.
- Democratic attorneys general sue the U.S. Department of Housing and Urban Development over its rollback of some anti-discrimination enforcement.
