BAM Key Details:

  • Democrats in the U.S. House and Senate have introduced a bill to ban hedge funds from buying and owning single-family homes. 
  • The 10-year phase-out period would impose stiff tax penalties on hedge funds, the proceeds of which would go toward down payment assistance for individual buyers.
  • A related bill, “American Neighborhoods Protection Act,” would require corporate owners of more than 75 single-family homes to pay an annual fee for down-payment assistance.

Democrats in both branches of the U.S. Congress have introduced a bill on Tuesday, December 5, to ban hedge funds from owning single-family homes.

Senator Jeff Merkley of Oregon and Representative Adam Smith of Washington proposed the bill to free up more single-family homes for independent (i.e., non-corporate) home buyers, increasing the supply of affordable homes to meet current demand. 

The bill would require hedge funds to sell any single-family homes they currently own over a 10-year period and would prevent them from buying any others in the future. 

The suggested 10-year phase-out period would impose a stiff tax penalty on hedge funds, the proceeds from which would go toward down payment assistance for individuals wanting to buy homes from corporate owners, as reported by the New York Times

In the case of an applicable taxpayer, there is hereby imposed a tax on the acquisition of any newly acquired single-family residence equal to 50% of the fair market value of such residence.

“End Hedge Fund Control of American Homes Act’’

Meanwhile, two other U.S. representatives (Jeff Jackson and Alma Adams of North Carolina, both Democrats) introduced a related bill, the “American Neighborhoods Protection Act,” which would require corporate owners of more than 75 single-family homes to pay an annual fee for each property, which would also go toward down payment assistance. 

Here’s what we know so far.

Legislation Overview

The bill proposed by Merkley and Smith, named the “End Hedge Fund Control of American Homes Act of 2023” would ban hedge funds—defined as corporations, partnerships, or real estate investment trusts managing funds from real estate investors—from buying or owning single-family homes. 

Hedge funds would have ten years to sell all the single-family homes they currently own. The bill proposes a ten-year phase-out period that would impose a tax penalty on hedge funds, requiring them to pay 50% of fair market value for each single-family home they currently own. 

The text of the bill includes a table to illustrate the 10-year phase-out plan, which would end with a complete prohibition on corporate purchases and ownership of single-family homes. 


According to the bill, those who fail to report the required information, or fail to report accurate information, “shall pay a penalty of $20,000.” 

Potential Impact

The aim of this legislation is ultimately to return housing supply to the market to benefit non-corporate home buyers. Rising home prices and soaring mortgage rates over the past several months have made housing affordability worse than ever, making it harder for ordinary Americans to attain homeownership. 

With the recent downturn in mortgage rates, more buyers are reentering the market, but inventory is still too low to meet demand. 

You have created a situation where ordinary Americans aren’t bidding against other families, they’re bidding against the billionaires of America for these houses. And it’s driving up rents and it’s driving up home prices.

Senator Jeff Merkley of Oregon

Additional Legislation

Representatives Jeff Jackson and Alma Adams of North Carolina, both Democrats, proposed another related bill, the “American Neighborhoods Protection Act,” on Wednesday, December 6. 

The bill would require corporate owners of more than 75 single-family homes to pay an annual fee of $10,000 per home, which would go toward down payment assistance for families. 

Background and Context

Both bills were proposed three months after a New York Times story on the impact of corporate-backed real estate investment in Charlotte, NC. Investors purchased a significant share of available homes, often outbidding first-time home buyers. 

Wall Street joined the single-family rental market after the Great Financial Crisis of 2008. By June 2022, institutional investors owned 3% of all single-family rental properties nationwide. In Charlotte, NC, they owned a whopping 20% of all single-family rentals. 

By June 2023, they owned 26%, despite the slowing housing market. 

Stakeholder Perspectives

Proponents of the bill are transparent in their desire to address the concentration of wealth in the U.S. It’s no secret that homeowners, on average, have a net worth 75 times higher than renters. And since corporate real estate investors tend to focus on modestly-priced homes, they’re often competing with buyers who don’t have the same financial advantages. 

Critics of the bill, such as David Howard of the National Rental Home Council, argue that the real problem is not Wall Street but the nationwide lack of new housing. According to various estimates, we need anywhere from 2 million to 6.5 million new homes to fill that gap. 

Policies really need to be shaped and crafted so that they support the production, investment and development of new housing. I think bills that work against that ultimately are just going to perpetuate the challenges we’re already facing.

David Howard

Chief Executive of the National Rental Home Council

Political Landscape

The partisan divide in Congress makes it (at best) uncertain that either of these bills will become law in the current session. But the legislators behind them argue that it’s time to start a conversation. 

As politicians from all parties weigh in on the housing market during a national election year, it’s worth keeping up with debates to see how each contender perceives the housing market situation and what solutions they’ve tried and are open to. 

Will Housing Affordability Find Bipartisan Ground?

Right now, the legislation remains a proposal, and there is likely a long way to go to determine whether or not this will become a law. 

On Thursday’s Hot Sheet, Byron Lazine discussed the implications this has as we turn the corner into 2024. The spotlight is on how each party addresses the pressing issue of housing affordability—a challenge that has left many locked out of the American dream. 

Since Democrats proposed this bill, this gives them the ability coming into an election year, to go on the campaign trail and say, ‘We’re the only ones that are proposing bills to increase the supply of housing. We’re the only ones that have a plan to do something about the inventory issue.’ 

(That’s) if Republicans were to push back on this bill. They’re not saying that Republicans are pushing back…I would argue that if they do push back, that’s bad PR…

So we’ll see if this becomes bipartisan…or if this actually goes through.

Byron Lazine