Treasury proposes rule banning large investors from buying single-family homes

The Department of the Treasury has proposed a regulation to enforce section 1001 of the 21st Century ROAD to Housing Act, the statute that prohibits large institutional investors from purchasing single-family homes. The notice of proposed rulemaking was published in the Federal Register of 23 October 2026 (Vol. 91, No. 204, Proposed Rules, p. 66800), under docket TREAS–DO–2026–0529 and RIN 1505–AC96. Comments must be received on or before 23 November 2026.

The statute, enacted on 11 July 2026, is intended to promote homeownership for American families by barring purchases of single-family homes by large institutional investors, subject to specified “excepted purchases.” Its requirements take effect 180 days after enactment, that is, on 7 January 2027. The proposal would add a new 31 CFR Part 36, titled “Large Institutional Investor Ban,” and is expressly framed as the first phase of a phased rulemaking: Treasury says it expects future rulemakings on other excepted purchase categories, compliance procedures, reporting and recordkeeping, and enforcement actions.

Who counts as a large institutional investor

The proposal interprets, without amending, the statutory definitions. Under section 1001, a large institutional investor is generally a for-profit entity engaged, in whole or in part, in the business of investing in, owning, renting, managing or holding single-family homes that, alone or in concert with other entities, has direct or indirect investment control of not less than 350 single-family homes, excluding homes bought in an excepted purchase after enactment.

• Proposed § 36.15 defines “in the business of” by reference to the purpose of receiving investment gains, rental income, management fees or any other income or financial gain, and excludes holdings that are temporary and incidental to another bona fide business.
• Proposed § 36.16 defines a “passive investor” as one with no director, officer, employee or designee sitting on the second entity’s board or management, and no “property control right” over its single-family homes.
• Proposed § 36.2 defines “property control right” as a consent, approval, veto or similar right allowing an entity to make, direct or prevent another entity’s decisions on buying, selling, holding, leasing, renovating or managing a home.

The exceptions Treasury wants to clarify

The rule would give content to the statutory carve-outs, which Treasury says can support housing supply without reducing the stock available to owner-occupants.

• Build-to-rent: homes not previously occupied by an owner-occupant, purchased within 18 months of receiving a certificate of occupancy, and first occupied by renters after purchase.
• Renovate-to-rent: substantial rehabilitation of homes that fail structural or core system elements of local building codes, with improvements of at least 15 percent of the purchase price of the home; a non-exclusive safe harbor applies at 10 percent on structural or core elements.
• Homeownership program: rents and fees no higher than on comparable homes outside the program, consumer-credit treatment of the contract, positive reporting of rental payments and meaningful financial support for the renter’s purchase.
• Program to boost homeownership: positive rent reporting, a right of first refusal and a 30-day first-look period for the renter.
• Other carve-outs: satisfaction of debts previously contracted, loss mitigation or servicing compliance, and purchases from another large institutional investor that owned the home at enactment or bought it in compliance with the Act.

Penalties, paperwork and review

Section 1001(d)(1) authorises civil penalties of up to the greater of $1 million or three times the purchase price of the property. Proposed § 36.17 would treat a prohibited purchase involving more than one large institutional investor as a single violation for calculating that maximum, and proposed § 36.18 adds a severability clause.

Treasury is also requesting a new information collection, “Recordkeeping; 21st Century ROAD to Housing Act Prohibition on Large Institutional Investor Purchases of Single-Family Homes,” under OMB control number 1505–NEW, with an estimated 100 to 300 respondents, one hour per response and 100 to 300 annual burden hours. The Office of Information and Regulatory Affairs has designated the proposal a significant regulatory action under Executive Order 12866. The rule does not address the annual notice that large investors must file with the Department of Housing and Urban Development under section 1001(c)(8); Treasury consulted with HUD, the Federal Housing Finance Agency and the Securities and Exchange Commission in developing the text, which is signed by Ethan Fallang, Deputy Assistant Secretary for Capital Markets.

What it means for the rental market

For real estate funds, REITs and build-to-rent operators, the proposal draws the line between portfolio capital and control: equity stakes above 25 percent of a class of interests, board interlocks and contractual veto rights can pull an investor out of “passive” status and into the ban. Treasury argues the definitions reduce uncertainty and curb evasion through layered ownership structures, while conceding that reliable data on how many investors will be affected are not currently available.

Source: Federal Register, Vol. 91, No. 204, 23 October 2026, Proposed Rules, p. 66800 (official reference: 2026–21675; docket TREAS–DO–2026–0529, RIN 1505–AC96).