Democrats Introduce Alternate Vision to Curtail Investors

Donald Trump’s steady drumbeat for an institutional investor ban in the single-family housing market is facing a counterproposal courtesy of Senate Democrats.

Prior to his State of the Union address on Tuesday — when Trump brought up the proposed investor ban — Senate Democrats introduced a different proposal to limit investors in the housing market, the New York Times reported. Seventeen Democrats co-sponsored the bill, led by Sen. Elizabeth Warren.

The American Homeownership Act’s primary tenet would eliminate tax breaks for home purchases by Wall Street firms and other large corporations, according to a fact sheet released by Senate Democrats. That includes tax breaks for corporate entities buying more than 50 single-family homes to be rented out.

The bill would also prevent institutional investors from securing federally backed mortgages or buying foreclosed homes from federal agencies.

There are exceptions in the act, including for mom-and-pop landlords and developers building and owning multifamily properties.

The act calls for the savings from the tax break eliminations to be reinvested in housing construction and programs that make homeownership more affordable. There’s also a call for more enforcement, particularly in the antitrust realm.

“This bill will take on predatory landlords while making investments to increase housing supply and boost homeownership for Americans,” Warren said.

While it follows in the footsteps of the administration’s narrative that Wall Street is causing homeownership problems for everyday Americans — which doesn’t necessarily come through in reports on the subject — it takes a different approach than the White House.

The Trump administration called for a ban on investors with at least 100 single-family homes from purchasing more properties, a wider net than the 1,000-home threshold midsize investors had hoped. Exemptions to the ban include investors who are building or renovating homes for rent (the Democrats also have exemptions for rehabilitations).

The ban was excluded from the House-passed “Housing in the 21st Century Act,” making its inclusion in the Senate bill critical for it to be part of the final reconciled legislation.

— Holden Walter-Warner