As housing policies take center stage, national proposals leave loopholes for private equity industry

At the World Economic Forum last month, President Donald Trump unveiled details of his proposed ban on institutional investor purchases of single-family homes via an executive order. The executive order came two weeks after Trump announced the ban.

In his speech at Davos, Trump called home ownership a bedrock American value and declared that “America will not become a nation of renters.” Trump also blamed immigrants for the ongoing housing affordability crisis, a claim that has been debunked by housing experts. Additionally, the president announced he would be capping credit card interest rates at 10% for one year in an effort to encourage Americans’ ability to save money for a home purchase. 

The provisions of the executive order include: 

• Preventing government-sponsored enterprises (GSEs) such as Fannie Mae or Freddie Mac from backing mortgages for investor purchases of single-family homes
• Preventing the disposal of federal assets in such a manner as to transfer a single-family home to an institutional investor
• Providing for the review of “substantial” institutional investor acquisitions of single-family homes by the Department of Justice and the Federal Trade Commission
• Exempting “build-to-rent properties that are planned, permitted, financed, and constructed as rental communities” from the order

The order additionally directs Congress to draft legislation that would prevent institutional investors from purchasing single family homes. While a package of housing bills passed a House floor vote last week, the bills largely focused on spurring further development and building to increase housing supply. Despite White House pressure to add the ban to the bill package, GOP lawmakers pushed back, instead opting to separately consider three different investor ban bills in the Financial Services Committee. 

While a ban on institutional investor purchases of single-family homes would be a welcome change to the Wild West landscape of corporate landlording, additional policy interventions are needed to address the ongoing housing affordability crisis in the US. Other measures of the order appear to be largely symbolic: notably, GSE loans can’t be used by investors to buy single-family homes already, and institutional investors have significantly slowed their purchases of single-family housing since the Great Recession. On top of that, the executive order’s carve-out for build-to-rent communities will be a boon for Wall Street landlords like Blackstone. 

Unfortunately, the federal policies currently under consideration to tackle the housing crisis let corporate landlords off the hook when it comes to protecting tenants. Occupants of single-family homes and potential homebuyers aren’t the only people who are being harmed by corporate landlords. Investors own a significant amount of manufactured housing and 10% of all US apartments, exposing millions of Americans to their unfair, exploitative business practices, including egregious rent hikes, unjust evictions, expensive junk fees, deferred maintenance, pest issues, and more. Meaningfully addressing the housing crisis means addressing the conditions that have allowed corporate landlords to get away with abusing their tenants for decades. 

To that end, the president and policymakers should take a comprehensive, wide-ranging approach to bringing down the cost of housing and holding corporate landlords accountable. In addition to a ban on investor ownership of single-family homes (and expanding that ban on build-to-rent properties), policymakers might consider any or all of the following: 

• A federal landlord complaint database to promote transparency and accountability among corporate landlords
• Just cause eviction protections to prevent arbitrary and/or unjust evictions
• Landlord licensing to ensure that investor-owned housing is fit for habitation, and that the landlord is in good standing to conduct business
• Federal rent stabilization policies to limit a tenant’s rent increase to a specific dollar amount and/or the percentage the rent can be increased after the tenant vacates the premises.

For policymakers interested in holding corporate landlords accountable for their role in the national housing affordability crisis, check out PESP’s policy report series on tackling corporate landlords.