21st Century ROAD to Housing Act: Rules for Institutional Investors

The wide-ranging 21st Century ROAD to Housing Act, P.L. 119-101 (the “Act”) was enacted on July 11, 2026. After many version changes proposed by both the House and Senate, strong bipartisan majorities in both chambers (85-5 in the Senate and 358-32 in the House) resulted in passage. The Act states that its goal is to increase the number of single-family homes available to individual households for purchase.

Why Congress Passed the ROAD to Housing Act?

The Act addresses what Congress has determined is a national housing affordability crisis: that a shortage of millions of housing units is driving up costs and placing an increasing strain on hardworking families. The Act is intended to preserve and expand the number of single-family homes available to individuals for purchase. In furtherance of this goal, and as discussed in more detail below, one of the several key provisions of the Act (section 1001) is entitled “Homes are for people, not corporations,” and is aimed at preventing “large institutional investors” from purchasing single-family homes. These provisions become effective 180 days after the date of enactment of the Act – January 7, 2027 – and are repealed 15 years after this date.

In addition to the provisions relating to institutional investor ownership of single-family homes, the Act addresses many other areas affecting home ownership, including housing finance, housing supply (such as state and local zoning), opportunity zones, veterans’ housing, community banking, and central bank digital currency.

Large Institutional Investor Prohibition

The prohibition against purchases by a “large institutional investor” applies to an entity that has at least 350 “single-family homes” under “direct or indirect investment control,” and that is engaged, in whole or in part, in the business of investing in, owning, renting, managing, or holding single-family homes.

For this purpose, a single-family home is a property (other than a manufactured home) that contains 2 or fewer dwelling units that are each intended for residential occupancy by a single household.

What Counts as Direct or Indirect Investment Control?

A large institutional investor has direct or indirect investment control if, with respect to a single-family home, it:

1. Owns, or has primary authority or fiduciary responsibility to make material investment or management decisions;
2. Is, or directly or indirectly controls, the general partner or managing member of the owning entity;
3. Is or controls the investment manager, management company, or investment advisor of the owning entity;
4. Owns or controls more than 25 percent of any class of equity interests of the owning entity, unless the entity is a passive investor; or
5. Otherwise controls the owning entity.

Which Purchases Are Exempted from the Prohibition?

The prohibition against purchases does not apply to purchases that took place prior to the enactment of the Act, nor to “excepted purchases.” A purchase of a single-family home is an excepted purchase if it is:

1. Newly constructed, renovated, or a rental conversion for sale;
   
   
2. Pursuant to a build-to-rent program (purchase, construction, or construction and retention of newly constructed single-family homes to be managed as a rental property);
   
   
3. Pursuant to a “renovate-to-rent” program that:
   1. Substantially rehabilitates the home that otherwise does not meet structural or core system elements of local building codes; and
   2. Makes improvements in an aggregate dollar amount of at least 15% of the purchase price of the single-family home;
      
      
4. Pursuant to homeownership promotion programs that:
   1. Among other requirements, require contribution of meaningful financial support from the large institutional investor, including price concessions, for the purchase of the single-family home by the renter; or
   2. Provides for the right of first refusal and a 30-day “first look” period, and optional financial support that can apply to either the renter’s current home or another home;
      
      
5. Pursuant to actions in connection with the satisfaction of previous debts and where repossession rights exist, and acquisitions by mortgage servicers or lenders resulting from exercising security rights, such as foreclosure, deed-in-lieu, provided these are not part of a long-term investment strategy;
   
   
6. Purchased from another large institutional investor that either owned the home at the Act’s enactment or acquired it in compliance with the Act;
   
   
7. Purchased from other types of investors (i.e., not a large institutional investor) as long as the purchase occurred no more than 2 years after the Act’s effective date;
   
   
8. Newly constructed, renovated, or a rental conversion that is intended for age-restricted communities (one or more residents aged 55 years or older), and satisfies HUD visibility standards; or
   
   
9. Purchased through a single purchase or a combination or series of purchases described above.

Removal of Forced Sale Requirement

Of particular note is the elimination from the definition of “excepted purchases” the requirement to dispose of certain housing to an individual homebuyer within 7 years of acquisition by the large institutional investor, unless no offer to purchase is made within 60 days of advertising the home for sale. Specifically, the Act notes that nothing in the Act shall be construed to require any large institutional investor to divest or otherwise sell any single-family home purchased before the date of enactment of this Act, or prevent the filing of a petition or otherwise affect any bankruptcy proceeding.

The removal of this provision was the result of fierce lobbying by the build-to-rent (BTR) industry, with both operators and affordable housing advocates maintaining that an effective ban on the business model would hinder housing supply.

Example: Applying the Prohibition

Assume a real estate fund owns 400 single-family homes, acquired before the effective date of the Act. It decides to acquire a home owned by empty-nesters who want to downsize, intending to add to its portfolio of long-term rental holdings.

The transaction would be a prohibited transaction. The fund is a large institutional investor, as it owns and controls at least 350 homes, none of which were acquired in excepted transactions (i.e., the 350 count only excludes single-family homes acquired after the date of the Act’s enactment that were acquired as an excepted purchase). The purchase does not satisfy any of the exceptions to treatment as a prohibited transaction: the home is an existing home, not newly constructed, renovated, or a rental conversion for sale; not part of a build-to-rent, renovate-to-rent, or home ownership program; not acquired in satisfaction of a debt; not acquired from another large institutional investor that either owned the home at enactment or acquired it in compliance with the Act, not from other types of investors within 2 years of the Act’s effective date; nor intended for an age-restricted community.

On the other hand, the transaction would not fall into the prohibited transaction category if the fund owned 340 homes or the total number of homes owned, when reduced by any home purchased in an excepted purchase after the date of enactment of the Act, is less than 350 homes.

Compliance, Enforcement, and Reporting Requirements

Notice Requirement to HUD

No later than 180 days after the date of the Act’s enactment, and by December 31 of each year thereafter, each person or entity that satisfies the definition of a large institutional investor must:

1. Notify HUD whether such owner is a large institutional investor; and
2. In such notification, identify (A) how many single-family homes such large institutional investor has direct or indirect investment control of as of the date of such notice, and (B) the city and State where each such single-family home is located, unless such large institutional investor owns 10 or fewer single-family homes in such city.

Civil Penalties for Violations

A large institutional investor that violates the prohibition on purchases is liable for a civil penalty in an amount that is the greater of (i) up to $1,000,000 per violation, or (ii) 3 times the purchase price of the property involved.

Renter Outreach Resource

The Act establishes a “Renter Outreach Resource”—a toll-free phone number and public website—to help renters of residential properties owned by large institutional investors raise and resolve disputes, including potential federal law violations. The resource is designed to notify federal agencies of disputes, share information among agencies, monitor disputes, and resolve them where practicable.

Procedures must be established to respond promptly (in writing where appropriate) to renters and to document those responses. HUD must investigate reported potential federal law violations, give the institutional investor an opportunity to respond, and then provide the renter with contact information for the relevant state authority.

Additionally, each large institutional investor must give renters, at move-in and annually thereafter, written notice about the resource and contact information for the person handling disputes and must prominently feature the resource on its public website.

Annual Report to Congress

Finally, by March 31 of each year, HUD must submit a public report to Congress aggregating the prior year’s information, including the types and number of disputes about potential federal and state law violations, dispute resolutions where practicable, and the notice information provided by each large institutional investor.

What This Means for Real Estate Investors and Funds

Real estate funds, REITs, and other institutional owners of single-family rental portfolios should not wait until the January 7, 2027, effective date to assess their exposure under the Act. A few practical steps can help:

• Count current holdings. Determine whether direct or indirect investment control reaches the 350-home threshold, including homes held through an entity which the large institutional investor controls, or has control of the investment manager, management company, or investment advisor.
• Map planned acquisitions against the exceptions. Build-to-rent development, renovate-to-rent programs, and homeownership promotion programs remain available paths to growth, but each carries its own documentation requirements.
• Prepare for HUD notification. Investors that meet the definition must notify HUD within 180 days of enactment and by December 31 of each year thereafter, including a home count by city and state.
• Update renter-facing materials. Leases, move-in packets, and websites will need to reference the new Renter Outreach Resource once HUD establishes it.

EisnerAmper’s Real Estate and Real Estate Private Equity teams can help investors evaluate portfolio structures, model the impact of the 350-home threshold, and prepare for the Act’s notification and reporting requirements. Contact us to discuss how the Act affects your organization’s acquisition strategy.