Will Large Institutional Investors – Including Public Plans — be Prohibited from Buying Single-Family Homes?

On March 12, 2026, the Senate passed the bipartisan housing package (H.R. 6644, renamed The 21st Century ROAD to Housing Act) by a vote of 89–10, signaling broad bi-partisan support for the legislation, which now includes a ban on large institutional investors’ purchase of single-family homes demanded by the White House. The House of Representatives passed its version of a housing bill in February — with similar strong bipartisan support (390–9) — but without such a prohibition, which has now become a “flashpoint” and is reportedly “complicating talks” between House, Senate and Administration negotiators. House Republicans’ have concerns about the ban’s market interference, as well as the housing industry’s warnings about impacts on build‑to‑rent capital, and there are also questions about whether investor restrictions will meaningfully improve affordability. These could delay getting a final bill to the President’s desk. What are the implications for institutional investors in general — and for public pension plans in particular?

The legislation approved by the Senate is comprised of most of the provisions from both the original House-approved bill (H.R. 6644) and the Senate Committee on Banking, Housing, and Urban Affairs’ originally proposed legislation (S. 2651). However, as noted, it also includes a temporary ban on large institutional investor purchasing of single-family housing, in direct response to Executive Order 14376 (“Stopping Wall Street from Competing with Main Street Homebuyers”) issued by President Trump on January 20, 2026. The Senate-passed bill also includes a temporary prohibition on the Federal Reserve issuing a central bank digital currency (CBDC).

Both the bills now approved by the House and Senate contain a number of titles focused on a wide range of reforms to increase the supply of affordable housing in the U.S. These include:

Explicitly acknowledging that insufficient housing supply is driving up prices, with the House bill expressly stating it is “aimed at ameliorating the affordability crisis” by working to increase home ownership.
Increasing housing supply with measures designed to boost construction of affordable homes by reducing regulatory barriers that slow or block new housing development and encourage or incentivize local governments to expand housing development capacity.
Lowering housing costs for buyers and renters by supporting first‑time homebuyers, targeting affordability gaps, and expanding access to more affordable rental options.
Modernizing federal housing programs by updating long‑standing federal housing tools, including improvements to and expanded flexibility of the HOME Investment Partnerships Program. This is the largest federal block grant program in the U.S., designed exclusively to create affordable housing for low-to-moderate income households using annual formula grants to state and local governments to fund a wide range of activities, including building, buying, and rehabilitating affordable housing for rent or homeownership.

But perhaps the most controversial provision is the Senate-passed 15-year ban on large institutional investors’ purchase (directly or indirectly) of any single-family home, defined as a structure containing two or fewer dwelling units intended for residential occupancy by a single household (expressly excluding manufactured homes), unless such purchase qualifies for a statutory exemption.

Definition of “Large Institutional Investor:” This refers to any for-profit entity engaged in investing in, owning, renting, managing, or holding single-family homes, that alone or together with other entities has direct or indirect investment control over 350 or more single-family homes in the aggregate. The 350-house threshold excludes homes purchased under a statutory exception, discussed below. In addition, the Senate language explicitly provides that the term “large institutional investor does not include any local, State, Tribal, or Federal government entity or instrumentality thereof.”
Definition of “Purchase:” The term “purchase” is defined broadly to include any purchase, transfer, or other acquisition of a single-family home, including through mergers, acquisitions, construction, foreclosures, or bulk purchases, whether or not for cash consideration.
Definition of “Investment Control:” The bill defines “investment control” broadly to include entities that: (i) own the home or have primary investment or management decision-making authority; (ii) directly or indirectly control the owning entity (e.g., general partner, managing member, investment manager, or advisor); or (iii) directly or indirectly own or control more than 25 percent of the equity class of any entity that owns the single-family home (unless such entity is a passive investor). The term DOES NOT include ownership or control of debt investments and “single family home” excludes manufactured homes, homes of three or more dwelling units, and land.
Enforcement: Violations of the prohibition would carry civil penalties of up to $1 million per violation or three times the purchase price, whichever is greater.
Divestiture: The bill does not require large institutional investors to divest or sell single-family homes purchased before the date of enactment, nor does it prevent the filing of bankruptcy petitions or otherwise affect bankruptcy proceedings.

There is also a list of “excepted purchases” made by large institutional investors that are nevertheless exempted from the general ban. Specifically, an ‘‘excepted purchase’’ means any purchase of a single-family home that is:

Newly constructed, renovated, or a rental conversion home;
Newly constructed pursuant to build-to-rent programs;
Pursuant to renovate-to-rent programs;
Pursuant to homeownership programs;
Pursuant to programs to boost homeownership;
Debt satisfaction: In connection with the satisfaction of debts previously contracted in good faith and where the large institutional investor has the right to repossess the single-family home under such contract;
Foreclosure transactions: Undertaken by a mortgage servicer, lender, or other entity that, among other things, has a legal right to a single-family home, for the purpose of loss mitigation or compliance with servicing or investor obligations, and not as a long-term investment strategy;
Purchases from other large institutional investors: Purchased from another large institutional investor that either owned the single-family home on the Act’s date of enactment or purchased the single-family home in compliance with the new Title IX;
Transition period: Purchased from an investor not covered under this section, so long as the purchase occurred not more than two years after the Act’s effective date;
Senior housing: Newly constructed, renovated, or a rental conversion of housing for households with one or more members age 55 or older among other criteria; or
Aggregations: Purchased through a single purchase or combination or a series of purchases described in the preceding bullets.

Finally, as the law firm of Latham & Watkins LLP points out, there are Disposal Requirements for homes acquired under certain of these excepted purchases — specifically, newly constructed or renovated for-sale homes; build-to-rent programs; renovate-to-rent programs; and senior housing (but only to the extent such housing ceases to meet the exception requirements). In these cases, the large institutional investor must dispose of the property to an individual homebuyer within seven years of purchase.

Latham & Watkins also notes that the seven-year disposal period runs with the property and does not reset if the property is subsequently purchased by another large institutional investor under a different exception. Also, the disposal requirement will not apply in the case of any Real Estate Investment Trust (REIT) — a company that owns, operates or finances income-producing real estate, modeled after mutual funds, providing investors with regular income streams and long-term capital appreciation and that typically trades on major stock exchanges — if the disposal of such property would be a prohibited transaction that would lead to a 100 percent tax under the statute governing such types of entities.

In addition, if there is an active lease with a renter of the applicable home that went into effect no later than six months prior to the date by which the home must be disposed, the disposal deadline will be extended until the contract expires (with the caveat that renewals of such contracts are limited to 36 months), the law firm also explains.

Finally, before disposing of a home that is subject to a lease contract, the renter must be given a right of first refusal and a 30-day “first look” period to purchase the home. If the renter declines to either renew the lease or purchase the home, the large institutional investor must widely advertise the property and make it broadly accessible to individual homebuyers and the general public. If no individual homebuyer purchases or offers to purchase the home within 60 days of advertising, the investor will be deemed in compliance with the disposal requirements.

So where do things go from here?

Since the Senate did not pass the same language that the House adopted, a conference between the two chambers is required in order to come up with a compromise version that will then need to be adopted without change by both sides of the Hill before it can be cleared for Presidential approval. But according to CNBC — and echoed by other observers — “the bill faces an upward battle in the House,” saying the Senate ban is creating “headaches.” For example, House GOP leaders have already said the measure will need to be negotiated, “suggesting they will not take up the Senate-passed bill,” CNBC pointed out, with House Majority Leader Steve Scalise (R-LA) reportedly telling fellow House Republicans in a closed-door meeting that the measure is likely to bog down over differences between the two chambers’ versions.

Industry groups, including the National Association of Home Builders, the Mortgage Bankers Association and the National Housing Conference, are also warning in a position statement that the seven-year limit would eliminate production of build-to-rent housing and “would take hundreds of thousands of housing units off the market over the next decade, many of which would serve lower- and middle-income households.” This concern is echoed by market‑oriented Congressional Republicans, who express worries that the ban risks choking off private capital needed for new housing construction.

Progressive housing advocates are also expressing concerns with the provision, arguing that the 350‑home threshold is too high. They also think the exceptions allow continued consolidation and are unhappy that the ban does not address existing portfolios of tens of thousands of homes. As the law firm of Davis Polk observes, the bill “has important exceptions that may limit its impact in certain circumstances.”

As noted previously, the ban contains an exception for any local, State, Tribal, or Federal government entity or instrumentality thereof as being large institutional investors otherwise subject to the legislation’s probation on the ownership of single-family homes. Does this mean that governmental pension plans are exempt from the ban?

First, there does not appear to be any explicit, citable evidence in the available Senate Banking Committee materials, legal commentaries or other coverage of the ban confirming that governmental pension plans are exempt from it.

However, it should also be noted that governmental pension plans have been consistently treated under federal law — tax law, ERISA, the sovereign immunity doctrine, and labor law – as governmental entities or instrumentalities of state or local government. (For example, Internal Revenue Code (IRC) Section 414(d) defines a “governmental plan” as “a plan established and maintained for its employees by the government of any State or political subdivision thereof, or by any agency or instrumentality of the foregoing.”)

This would appear to create a strong, well‑established legal presumption that governmental pension plans are not private institutional investors but rather arms of government. Also, the Securities and Exchange Commission (SEC) routinely distinguishes public pension systems from institutional investors such as private pension funds, REITs, and private equity funds.

Finally, it also should be noted that while Business Insider reported as far back as 2021 that “[p]ensions and a sovereign wealth fund are investing in residential real estate,” namely single family residences, and that institutional investors (including pension funds) have been “steadily acquiring single‑family homes across the country to rent out at a profit,” there is no clear indication that public pension funds have directly participated in these investments.

Indeed, where there is evidence of public pension funds investing in housing, it is mostly multifamily housing, with the Federal Reserve Bank of New York’s 2024 research series showing that public pension funds invest in affordable multifamily housing, not single‑family homes. Also, Institutional Investor reported in 2024 that pension funds are “tapping affordable housing,” but once again, it was multifamily housing, not single-family homes.

In summary, while public pension funds have a long history of investing in housing, it appears to be almost entirely multifamily, not single‑family, and it is typically indirect investment through private equity or REITs. There has been no evidence offered that suggests public pension funds are major direct buyers of single‑family homes; are competing with households for single-family home inventory; or are building large single-family home portfolios. It can therefore be surmised that large public pension plans are not likely the target of the Senate’s single‑family home ownership ban.

But while this would seem to be a valid assumption, this is not guaranteed. It follows from long‑standing legal doctrine, not clearly stated legislative intent. And this assumption can always be changed, or “clarified,” in conference negotiations. That is, any statutory exemption for governmental entities would implicitly appear to apply to governmental pension plans — unless expressly, explicitly excluded.

The bottom line: should public pension plans press to have the exemption for state and local governmental entities clarified to expressly apply to public pension plans? Or would this, by underscoring the implicit exemption, potentially cause opponents of public pension plans’ current investment activities – such as those related to environmental, social and governance (ESG) issues, for example – to work to have NCTR members and other governmental plans explicitly included as large institutional investors under the ban? In short, is it better, as the saying goes, to “let sleeping dogs lie?”

In any case, the issue of the investment ban’s applicability to public pension plans seems to largely depend, currently, on the eye of the beholder. What do you think? NCTR will be closely following this conference negotiation.

On March 12, 2026, the Senate passed the bipartisan housing package (H.R. 6644, renamed The 21st Century ROAD to Housing Act) by a vote of 89–10, signaling broad bi-partisan support for the legislation, which now includes a ban on large institutional investors’ purchase of single-family homes demanded by the White House. The House of Representatives passed its version of a housing bill in February — with similar strong bipartisan support (390–9) — but without such a prohibition, which has now become a “flashpoint” and is reportedly “complicating talks” between House, Senate and Administration negotiators. House Republicans’ have concerns about the ban’s market interference, as well as the housing industry’s warnings about impacts on build‑to‑rent capital, and there are also questions about whether investor restrictions will meaningfully improve affordability. These could delay getting a final bill to the President’s desk. What are the implications for institutional investors in general — and for public pension plans in particular?

The legislation approved by the Senate is comprised of most of the provisions from both the original House-approved bill (H.R. 6644) and the Senate Committee on Banking, Housing, and Urban Affairs’ originally proposed legislation (S. 2651). However, as noted, it also includes a temporary ban on large institutional investor purchasing of single-family housing, in direct response to Executive Order 14376 (“Stopping Wall Street from Competing with Main Street Homebuyers”) issued by President Trump on January 20, 2026. The Senate-passed bill also includes a temporary prohibition on the Federal Reserve issuing a central bank digital currency (CBDC).

Both the bills now approved by the House and Senate contain a number of titles focused on a wide range of reforms to increase the supply of affordable housing in the U.S. These include:

Explicitly acknowledging that insufficient housing supply is driving up prices, with the House bill expressly stating it is “aimed at ameliorating the affordability crisis” by working to increase home ownership.
Increasing housing supply with measures designed to boost construction of affordable homes by reducing regulatory barriers that slow or block new housing development and encourage or incentivize local governments to expand housing development capacity.
Lowering housing costs for buyers and renters by supporting first‑time homebuyers, targeting affordability gaps, and expanding access to more affordable rental options.
Modernizing federal housing programs by updating long‑standing federal housing tools, including improvements to and expanded flexibility of the HOME Investment Partnerships Program. This is the largest federal block grant program in the U.S., designed exclusively to create affordable housing for low-to-moderate income households using annual formula grants to state and local governments to fund a wide range of activities, including building, buying, and rehabilitating affordable housing for rent or homeownership.

But perhaps the most controversial provision is the Senate-passed 15-year ban on large institutional investors’ purchase (directly or indirectly) of any single-family home, defined as a structure containing two or fewer dwelling units intended for residential occupancy by a single household (expressly excluding manufactured homes), unless such purchase qualifies for a statutory exemption.

Definition of “Large Institutional Investor:” This refers to any for-profit entity engaged in investing in, owning, renting, managing, or holding single-family homes, that alone or together with other entities has direct or indirect investment control over 350 or more single-family homes in the aggregate. The 350-house threshold excludes homes purchased under a statutory exception, discussed below. In addition, the Senate language explicitly provides that the term “large institutional investor does not include any local, State, Tribal, or Federal government entity or instrumentality thereof.”
Definition of “Purchase:” The term “purchase” is defined broadly to include any purchase, transfer, or other acquisition of a single-family home, including through mergers, acquisitions, construction, foreclosures, or bulk purchases, whether or not for cash consideration.
Definition of “Investment Control:” The bill defines “investment control” broadly to include entities that: (i) own the home or have primary investment or management decision-making authority; (ii) directly or indirectly control the owning entity (e.g., general partner, managing member, investment manager, or advisor); or (iii) directly or indirectly own or control more than 25 percent of the equity class of any entity that owns the single-family home (unless such entity is a passive investor). The term DOES NOT include ownership or control of debt investments and “single family home” excludes manufactured homes, homes of three or more dwelling units, and land.
Enforcement: Violations of the prohibition would carry civil penalties of up to $1 million per violation or three times the purchase price, whichever is greater.
Divestiture: The bill does not require large institutional investors to divest or sell single-family homes purchased before the date of enactment, nor does it prevent the filing of bankruptcy petitions or otherwise affect bankruptcy proceedings.

There is also a list of “excepted purchases” made by large institutional investors that are nevertheless exempted from the general ban. Specifically, an ‘‘excepted purchase’’ means any purchase of a single-family home that is:

Newly constructed, renovated, or a rental conversion home;
Newly constructed pursuant to build-to-rent programs;
Pursuant to renovate-to-rent programs;
Pursuant homeownership programs;
Pursuant to programs to boost homeownership;
Debt satisfaction: In connection with the satisfaction of debts previously contracted in good faith and where the large institutional investor has the right to repossess the single-family home under such contract;
Foreclosure transactions: Undertaken by a mortgage servicer, lender, or other entity that, among other things, has a legal right to a single-family home, for the purpose of loss mitigation or compliance with servicing or investor obligations, and not as a long-term investment strategy;
Purchases from other large institutional investors: Purchased from another large institutional investor that either owned the single-family home on the Act’s date of enactment or purchased the single-family home in compliance with the new Title IX;
Transition period: Purchased from an investor not covered under this section, so long as the purchase occurred not more than two years after the Act’s effective date;
Senior housing: Newly constructed, renovated, or a rental conversion of housing for households with one or more members age 55 or older among other criteria; or
Aggregations: Purchased through a single purchase or combination or a series of purchases described in the preceding bullets.