On December 5, Representative Adam Smith (D-Wash.) and Senator Jeff Merkley (D-Ore.) teamed up to introduce the End Hedge Fund Control of American Homes Act of 2023. This legislation was introduced to address the growing problem of housing consolidation by Wall Street. Private equity firms and hedge funds purchasing single-family homes, especially under today’s difficult economic conditions, has made it more difficult for average Americans to become homeowners and is contributing to housing unaffordability and wealth inequality across the country.
- Prevents hedge funds from continuing to purchase single-family homes by imposing an immediate 50% tax on the fair market value of any future purchase of a single-family home by a hedge fund.
- Requires large hedge funds to sell off existing ownership of all single-family homes over 10 years or face significant tax penalties.
- Each year over ten years, large hedge funds would have to sell at least 10% of the total number of single-family homes they own until they own zero. Hedge funds would be subjected to a tax penalty for each single-family home owned above the maximum allowable amount for that year.
- Tax revenues would be reserved for down payment assistance for people seeking to purchase homes sold by the hedge funds.
- Families and individuals who don’t own any residential real estate are eligible for down payment assistance grants funded by the tax penalties paid by hedge funds.
- Exempts nonprofit organizations, public housing agencies and other government entities, and home builders from the taxes.
- Includes an explicit certification process for a purchaser to confirm that they do not own a majority interest in any other single family residential real estate.
The Private Equity Stakeholder Project (PESP) is a proud support of the End Hedge Fund Control of American Homes Act of 2023. PESP’s Housing Research Coordinator, Madeline Bankson, noted, “[c]orporate housing consolidation harms tenants and destabilizes communities by making it harder for working people to afford shelter. This bill will address the root cause of the consolidation issue, providing meaningful intervention that stops homes from being used as a means for generating profit.”
The bill was also endorsed by Consumer Action, National Consumer Law Center, Washington Low-Income Housing Alliance, National Housing Resource Center, Americans for Financial Reform, and the National Housing Law Project.