The U.S. Department of the Treasury issued proposed regulations implementing restrictions on large institutional investors purchasing single-family homes under the 21st Century ROAD to Housing Act. The proposal sets standards for permitted purchases through rental development, rehabilitation and homeownership programs, while clarifying which investors fall within the restrictions. Beginning Jan. 7, 2027, the act generally prohibits covered investors from purchasing, or contracting to purchase, a single-family home unless an exception applies. The statutory definition of a large institutional investor includes an entity’s business activities and whether it has direct or indirect investment control over at least 350 single-family homes. Under the proposal, investing in, owning, renting, managing or holding such homes would constitute a business when undertaken for income or financial gain rather than incidentally to another business. An entity could qualify as a passive investor in another entity that owns a home if it shares no directors or officers with that entity and has no property control right over the underlying homes. For permitted purchases, the proposal establishes standards for build-to-rent programs and non-exclusive safe harbors covering substantial rehabilitation under renovate-to-rent programs and meaningful financial support for renters buying homes. Safe harbors also address renters’ rights of first refusal and a 30-day first-look period. Other provisions clarify purchases involving previously contracted debts, loss mitigation and transfers between large institutional investors, as well as calculation of the maximum civil penalty when multiple large institutional investors participate in a single prohibited purchase.

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