Viewpoints
Here’s why legislative proposals targeting institutional investment in single-family rentals are raising concerns in the housing industry.
By Valerie M. Sargent, Broadband Communities and Matthew M. Berger, NMHC
As policymakers seek solutions to the nation’s housing affordability crisis, one growing segment of the rental housing market is at risk of being eliminated: build-to-rent (BTR) housing.
Recent legislative proposals targeting institutional investment in single-family rentals have raised significant concerns across the housing industry, particularly because of how they would impact BTR communities, which are an increasingly significant source of new housing supply.
What build-to-rent is and why it matters
Build-to-rent communities consist of newly constructed, purpose-built single-family homes designed specifically for rental. Unlike scattered-site single-family rentals, BTR homes are developed as cohesive multifamily communities comprised of single-family homes, often with shared amenities, professional management, and consistent infrastructure like we see in more traditional multifamily communities.
These communities serve a range of renters, including families who need more space than traditional apartments provide, as well as individuals who prefer the lifestyle of a single-family home without the financial or maintenance responsibilities of ownership. Importantly, every BTR unit represents new housing supply, helping address the larger shortage of available homes.
According to industry data, tens of thousands of BTR units are delivered annually, contributing meaningfully to housing availability in high-demand markets.
The legislative challenge
At the center of the current debate is the 21st Century ROAD to Housing Act, legislation the Senate passed on March 12, 2026, which, among its positive provisions, unfortunately seeks to limit institutional ownership of single-family rental housing. While the intent is to address concerns about investor activity, the language as drafted does fail to distinguish between scattered-site investments vs. purpose-built BTR communities.
The most significant concern is a provision that would require owners of BTR portfolios exceeding a defined threshold of 350 units developed after enactment to dispose of those assets generally within seven years but up to 10 years if a rental agreement is in place. This requirement poses a fundamental challenge to the BTR model, which relies on long-term ownership, operational stability, and economies of scale.
From a practical standpoint, this creates multiple downstream effects. Developers may be deterred from building new communities altogether if they are forced to exit within a limited timeframe. Because they are developed, owned, and operated like traditional multifamily communities, these are owners who buy, contract, and deploy amenities and technology such as bulk managed Wi-Fi, smart home technology, and other services that are tied to separate agreements with providers conducting installations. These contracts minimizing resident expenses would be at risk with these legislative requirements.
Existing communities could also become difficult to sell, as potential buyers would inherit the same regulatory constraints. And, critically, renters themselves could be summarily displaced if properties must be sold or converted. Forced disposition timelines are incompatible with standard multifamily investment practices and would likely “chill investment” in new housing development.
Unintended consequences for renters
Beyond supply impacts, the proposal introduces potential risks for residents currently living in BTR communities. If properties must be sold after a fixed period, the renters who may ultimately be displaced would likely be those who do not have the financial means to purchase the very homes they occupy, creating further housing challenges.
This outcome runs counter to the stated goal of improving affordability. BTR housing is often designed to serve households who are priced out of homeownership but still seek space, stability, and access to desirable neighborhoods. Limiting this option could reduce housing choice and increase pressure on already constrained rental markets.
Industry experts have also raised concerns about the broader policy direction. As rental housing economist Jay Parsons noted, “The biggest sticking point is the effective ban on build-to-rent construction … ignoring pro-housing groups and embracing the NIMBY camp instead.”
His assessment highlights the tension between efforts to regulate investor activity and the need to expand housing supply.
Industry advocacy and a unified response
In response to the proposed legislation, a broad coalition of housing and real estate organizations has been mobilized to advocate for changes. In a joint letter to House leadership, organizations including the National Multifamily Housing Council (NMHC), National Apartment Association (NAA), National Housing Conference, National Association of Home Builders, Mortgage Bankers Association, National Rental Home Council, Nareit, Institute of Real Estate Management, CRE Finance Council, National Affordable Housing Management Association, National Leased Housing Association, The Real Estate Roundtable, Leading Builders of America, and the Affordable Housing Tax Credit Coalition urged lawmakers to amend the bill to exempt BTR housing.
The letter makes a clear case: BTR communities are part of the solution, not the problem. By adding new housing supply, expanding options for renters, and serving households across income levels, these developments help address affordability challenges rather than exacerbate them.
The coalition also emphasized that removing BTR from the market would eliminate hundreds of thousands of potential housing units over time, undermining the broader legislative goals aimed at increasing supply.
Looking ahead
As the legislation moves through the House, industry stakeholders are working to ensure lawmakers understand the distinctions between different types of rental housing and the real-world implications of policy decisions. The outcome will have meaningful consequences not only for developers and operators, but for renters seeking attainable, flexible housing options. Most significantly, lawmakers must understand that BTR housing is not a redistribution of existing homes; it is the creation of new ones. As such, policies that discourage development may inadvertently deepen the supply shortages they seek to address.
At a time when the nation faces affordability issues and a significant housing shortage, the central question of how policy can support the creation of more housing, in more forms, for more people remains. For many in the industry, preserving and expanding build-to-rent housing is a critical part of the answer.
Matthew M. Berger is SVP and Head of Policy for the National Multifamily Housing Council (NMHC) and can be reached at mberger@nmhc.org. Valerie M. Sargent is a multifamily speaker, trainer and executive consultant, and is the multifamily news correspondent for Broadband Communities. Contact her at http://www.valeriemsargent.com.
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