Treasury proposes the rules for the ban on big investors buying single-family homes, which starts Jan. 7

By Kenji Harrow

WASHINGTON — The Treasury Department on Thursday proposed the rules that will decide which home purchases by large investors are still allowed once a new federal ban on institutional buying of single-family homes takes effect on Jan. 7, 2027.

The proposed rule, scheduled for publication in the Federal Register on Friday, carries out Section 1001 of the 21st Century ROAD to Housing Act, which was enacted July 11. The law bars a “large institutional investor” — generally a for-profit entity in the single-family rental business that, alone or with others, controls at least 350 single-family homes — from buying or contracting to buy another one unless the purchase fits one of several exceptions. Violations carry civil penalties of up to $1 million or three times the purchase price, whichever is greater.

The rule fills in those exceptions. “Treasury is working to ensure American families and workers have a fair shot at purchasing homes in their communities by increasing housing supply and limiting large institutional investors’ role in the market, while supporting a strong, stable housing market and avoiding unnecessary disruption,” Treasury Secretary Scott Bessent said in a statement. The department said the rule codifies key requirements of President Trump’s Executive Order 14376, “Stopping Wall Street from Competing with Main Street Homebuyers.”

What would still be allowed

• Build-to-rent. A large investor could still buy newly built homes that have never had an owner-occupant, if it buys within 18 months of the certificate of occupancy and the homes are first occupied by renters.
• Renovate-to-rent. A purchase would qualify if the home fails structural or core-system elements of local building codes when bought, the investor fixes all material deficiencies, and it spends at least 15 percent of the purchase price on improvements, as the statute requires. The proposal adds a safe harbor for the “substantial rehabilitation” test if at least 10 percent goes to structural or core systems. Painting, flooring, landscaping and appliances would not count as rehabilitation.
• Homeownership programs. Investors could buy homes they rent under contracts that report rent payments to credit bureaus, give renters a right to buy, and provide “meaningful financial support” toward a purchase. The proposed safe harbor for that support is the lesser of $5,000 or 2.5 percent of the price for a renter of at least five years, rising to 3.5 percent at seven years.
• Right of first refusal. Under the separate “program to boost homeownership,” an investor that decides to sell a rented home would have to notify the renter in writing and give the renter a 30-day first look before marketing it to anyone else.

The proposal also covers purchases tied to foreclosures and loss mitigation by servicers and lenders, sales between large investors of homes owned before the law took effect, and who counts as a “passive investor” in another entity’s homes. It would treat a single prohibited purchase involving several large investors as one violation, so that total penalties could not exceed the statutory cap.

What Treasury doesn’t know

The document is candid about one gap. “Reliable data are not currently available regarding how many institutional investors and other entities may be affected,” Treasury wrote in its regulatory analysis. The White House’s regulatory office deemed the proposal a significant regulatory action under Executive Order 12866, and the department said it expects the rule’s own costs to be small compared with those created by the statute itself.

The proposal poses 134 numbered questions to the public, including whether the 10 percent rehabilitation safe harbor is set at the right level and whether $5,000 is the right cap on renter support. Comments are due 30 days after Friday’s publication, through Regulations.gov under the caption “Restrictions on Large Institutional Investor Purchases of Single-Family Homes.” Treasury said it may write further rules on other parts of the law.

The proposal landed the same day President Trump signed an executive order directing Fannie Mae and Freddie Mac to test automatic cancellation of mortgage insurance and cheaper refinancing, part of a broader administration push on housing costs ahead of the Nov. 3 midterm elections.

Shannon McGahn, the National Association of Realtors’ executive vice president and chief advocacy officer, said in a statement after publication that the ROAD to Housing Act is the most significant bipartisan housing law in decades and that NAR supports measures including tax incentives that encourage large institutional owners to sell single-family rentals to owner-occupants.

The Inquisitor asked the Treasury press office and the rule’s listed contact office, the two largest publicly traded single-family landlords — Invitation Homes and American Homes 4 Rent — and the National Association of Realtors how the exceptions would apply in practice and what effect they expect on purchases after Jan. 7. None had responded by publication. The National Association of Realtors has since responded; its statement is included above. This story will be updated with any other response.

Update, Oct. 23, 2026: This story has been updated with a statement from the National Association of Realtors.

Photo: Suburban single-family homes. Nathan Anderson / Wikimedia Commons, CC0.