One bad provision could sink a critical bipartisan housing bill

Despite sweeping support and real substance, a poorly drafted investor ban could kill the 21st Century ROAD to Housing Act.

Section 901 effectively bans institutional investors. (Photo by Westend61/Getty Images)

Something remarkable has happened in Washington. A major piece of legislation cleared a Senate committee unanimously, another passed the House 390-9, and a merger of the two earned White House backing before sailing through a procedural vote 89-9-1.

That combined package, the 21st Century ROAD to Housing Act, represents a truly rare level of bipartisan consensus that the national housing shortage, which is a result of building regulations in cities and counties across the country, must be solved.

Despite its resilience and appeal, the package is in genuine danger of being kneecapped by a single provision that its own supporters agree is badly drafted. The saga of how it got here offers a window into both the promise and the persistent dysfunction of federal housing policy.

Two bills, one merger

The 21st Century ROAD to Housing Act is the product of two parallel legislative efforts in the House and Senate that were merged this year after the White House signaled openness to a combined package.

The Senate ROAD Act. Tim Scott and Elizabeth Warren — the respective chair and ranking member of the Senate Banking, Housing and Urban Affairs Committee — spent years building the Renewing Opportunity in the American Dream (ROAD) to Housing Act. It passed committee 24-0 and was briefly attached to the National Defense Authorization Act before being stripped during House negotiations.

The Scott-Warren partnership is notable in itself. Scott, a conservative from South Carolina, has made housing deregulation a signature issue, while Warren, a Massachusetts progressive, has focused on tenant protections and affordability mandates. The fact that their bill cleared committee unanimously underscores how broad the supply-side housing consensus has become.

The ROAD to Housing Act contributed the combined bill’s core supply-side mechanisms and federal program reforms. Its most important single provision, the Build Now Act, ties Community Development Block Grant funding to actual housing production, rewarding jurisdictions that permit and build more homes while penalizing persistent laggards.

The Build Now Act also brought to the bill manufactured housing modernization (by updating statutory definitions, loan insurance programs, and grant programs for manufactured home communities), veterans housing reforms, an expanded Rental Assistance Demonstration program, and a suite of disaster recovery provisions — such as one that would make the Community Development Block Grant’s Disaster Recovery program permanent.

The House bill. The Housing for the 21st Century Act was introduced in December 2025 by Financial Services Committee Chair French Hill and Ranking Member Maxine Waters in another Republican-Democrat collaboration. It passed last month by a vote of 390-9.

The bill’s contributions skew more toward design standards, grants, and zoning frameworks. It directs the Department of Housing and Urban Development (HUD) to publish model zoning codes and best practices, creates an Accelerating Home Building grant program to fund localities adopting pre-reviewed pattern-book designs, and establishes categorical exclusions from full National Environmental Policy Act review for low-impact infill and rehabilitation projects.

It also includes a wonky provision directing HUD to establish federal guidelines for mid-density structures with a single internal stairway up to five stories, known as point-access block buildings. These buildings are common in European cities but are effectively prohibited under most U.S. codes, eliminating an entire category of moderate-density housing.

Two elements were dropped in the merger: First, the House bill’s entire community bank title — 13 sections covering brokered deposit rules, supervisory modifications for smaller well-managed banks, credit-union-board modernization, and new bank-formation incentives — was removed as tangential to supply-side housing reforms.

Second, actual appropriations language was stripped. The combined bill authorizes appropriations but does not fund them; it is Congress that will have to appropriate money later for initiatives like the Innovation Fund (Section 210) and the Accelerating Home Building grants (Section 211).

Two provisions appear in neither predecessor bill: The institutional investor ban — Section 901 — was drafted during merger negotiations. And, entirely unrelated to housing, the combined bill includes a temporary prohibition on the Federal Reserve establishing a digital dollar. This Republican priority was included as a rider but has recently become a potential dealbreaker, as some House Republicans now insist the ban be made permanent.

Neither provision was part of the bipartisan process that produced the legislation’s core reforms.

The procedural vote on Tuesday — which came out 89-9 — confirmed that the Senate has the votes to pass the bill. A full floor vote is expected as soon as Thursday.

What the bill does

The supply-side provisions at the core of this legislation are substantive:

Tie federal funding to housing production. Rather than distribute housing funds based on plans and applications, the bill conditions a portion of federal funding on whether localities are actually permitting and building homes. If cities want the money, they must show results.

Streamline environmental reviews. Federal environmental-review requirements add significant time and cost to housing development, particularly in urban areas. The bill streamlines these processes without eliminating them, targeting procedural delays rather than environmental protections themselves.

Modernize manufactured housing rules. Manufactured housing remains one of the most underused tools in the affordable housing toolkit, and it is slowly getting more play in states like California. Modern manufactured homes can be high-quality and far cheaper than site-built housing, but federal regulations have not kept pace with the industry. The bill updates them.

Incentivize state and local regulatory reforms. Beyond funding incentives, the legislation rewards states and municipalities that reform exclusionary zoning, reduce permitting timelines, and eliminate unnecessary approvals.

Taken together, these provisions represent the kind of structural reforms — changing incentives and removing barriers so more homes actually get built — that housing advocates have pushed for years.

Section 901: The wrench in the works

One provision threatens to derail the whole effort.

To understand Section 901, it is worth understanding how institutional investors ended up in the single-family housing market. After the 2008 foreclosure crisis flooded the market with distressed homes, large firms bought properties in bulk and converted them to rentals, building portfolios of thousands of houses across the country.

Still, institutional investors own only a tiny share of the market overall. Entities owning 350 or more homes — the bill’s definition of a large institutional investor — control less than 1 percent of the roughly 92 million single-family homes in the United States. But there are certain Sunbelt markets where institutional players are more significant. During the pandemic housing boom, for example, investors (not necessarily all large institutions) accounted for more than 20 percent of home purchases in markets like Phoenix, Houston, Las Vegas, and Miami, according to the Wall Street Journal. In those places, the perception that families were competing with institutional buyers for scarce homes was more accurate.

Earlier this year, President Donald Trump signed an executive order banning large institutional investors from buying single-family homes. Many congressional Republicans were uneasy with what looked like a direct restriction on market activity, but the Senate Banking Committee ultimately incorporated a version of the ban into the bipartisan housing bill as part of securing White House support.

What could have been a relatively inconsequential regulation of a minor element of the country’s housing market has endangered the bill’s entire premise because of how it was written.

The bill bars investors owning 350 or more single-family homes from purchasing additional properties. It includes an exemption for build-to-rent (B.T.R.) development — but only if investors sell the homes to individual buyers within seven years.

A coalition of a dozen major industry groups — the Mortgage Bankers Association, the National Association of Home Builders, the National Housing Conference among them — wrote to Senate leadership arguing the seven-year requirement “will effectively shut down B.T.R. development.” B.T.R. investment depends on long-term rental-income streams, so a mandatory seven-year sell-off eliminates the planning horizon investors need to commit capital at all. If a developer cannot know whether the investment will survive past year seven, it is absolutely not worth it.

More than 100 pro-housing organizations, including YIMBY groups, tenant organizations, and housing nonprofits, signed a joint statement published Monday making the same point.

B.T.R. development does not take existing homes off the for-sale market, and restricting this kind of investment does not free up supply for individual buyers. Instead, it simply means fewer homes get built.

From a housing supply standpoint, the 21st Century ROAD to Housing Act has become a tragic situation. The bill’s reforms reflect years of bipartisan work and a genuine policy consensus about the need to increase supply.

Section 901 is a solvable problem. The seven-year rule could be applied, for example, only to metros where institutional investors own more than 5 percent of single-family homes. That threshold applies to only a handful of the 387 metropolitan areas in America. Everywhere else, the places where most people live, would be free to build.

Congress does not get many chances to pass legislation that is this broadly supported and addresses a problem this serious. They have the votes and the backing (unless the president is serious about his declaration that he will not sign any legislation until Congress passes the SAVE America Act). Now they just need not fumble this.