Senate Democrats’ bill targets bulk homebuyers with required disclosures

A collection of Senate Democrats are taking aim at institutional investors in single-family rental (SFR) homes. 

Amy Klobuchar (D-Minn.) and Sherrod Brown (D-Ohio) unveiled legislation on Friday that would require corporations and private equity firms to report bulk purchases of single-family homes to federal regulators for antitrust review.

The legislation — known as the Housing Acquisitions Review and Transparency (HART) Act — would require deep-pocketed landlords to disclose purchases to the Federal Trade Commission (FTC) and the Department of Justice (DOJ). According to a statement from the lawmakers, antitrust enforcers could then “stop anticompetitive transactions that could increase rents, decrease services, and push homebuyers out of the market.”

“Like far too many parts of our economy, housing is becoming increasingly concentrated in the hands of large corporations,” Klobuchar said in a statement. “As we’ve seen in other cases of unchecked consolidation, consumers often end up paying higher prices for fewer options. My legislation with Senator Brown will ensure antitrust reporting rules are applied to residential housing so commercial transactions of these properties no longer fly under the radar.”

The SFR industry has been a regular target of scorn from affordable housing advocates since growing in prominence in the aftermath of the financial crisis of the late 2000s. Back then, private equity firms bought large numbers of single-family homes in foreclosure — and at heavy discounts. The federal government encouraged these purchases in the hope that they would stabilize home prices.

Blackstone spun its SFR business into Invitation Homes and took it public as a real estate investment trust in 2017. Invitation now owns about 80,000 houses. Other large SFR companies include Progress Residential, American Homes 4 Rent and FirstKey Homes.

Critics have long contended that the presence of large landlords in communities causes rents to rise rapidly, displaces residents and pushes potential homeowners out of the market by inflating home values.

A recent study from Zillow found that single-family rent prices have increased almost 40% since the COVID-19 pandemic began in March 2020. And a study released this week by the Federal Reserve Bank of Philadelphia concluded that the presence of SFR companies raises rents for the houses they buy and for other SFRs in a community, but it did not find evidence that they cause gentrification.

The timing of the release is notable. President Joe Biden’s shaky performance in the first presidential debate two weeks ago has caused panic among congressional Democrats and donors, leading to discussions of whether Biden should be removed from the ticket.

In a high-stakes press conference on Thursday night, Biden said he aims to cap rent hikes at 5%. He did not say how he intends to do this, nor is it mentioned in the HART Act.

Co-sponsors of the bill are Mazie Hirono (D-Hawaii), Jeff Merkley (D-Ore.), Bernie Sanders (I-Vt.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.).

The bill has backing from the American Antitrust Institute, National Low Income Housing Coalition, the American Economic Liberties Project, P Street, Accountable.US and the Open Markets Institute.