July 11, 2023

Brown, Colleagues Introduce Bill to Crack Down on Big Corporate Investors that Buy Up Local Homes, Drive Up Housing Prices

Legislation Would Restrict Tax Breaks for Private Equity Firms and Other Large Outside Investors that Buy Up Thousands of Homes in Local Communities

WASHINGTON, D.C. – Today, U.S. Senator Sherrod Brown (D-OH), Chair of the Senate Banking, Housing, and Urban Affairs Committee, along with Senator Ron Wyden (D-OR), Chair of the Senate Finance Committee, and Senators Tina Smith (D-MN), Jeff Merkley (D-OR), Jack Reed (D-RI), John Fetterman (D-PA), Elizabeth Warren (D-MA) and Tammy Baldwin (D-WI) introduced a new bill to restrict tax breaks for big corporate investors that buy up homes, often driving up local housing prices and rents. The Stop Predatory Investing Act would prohibit an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties. Right now, two big investors own more than 12,000 homes in just three Ohio markets, and other large investors don’t report how many homes they own.

The bill restricts tax breaks for private equity and large investors that currently give them an advantage in the market for affordable single-family homes, and helps make homeownership a reality for more families across the country.

“In too many communities in Ohio, big investors funded by Wall Street buy up homes that could have gone to first-time homebuyers, then jack up rent, neglect repairs, and threaten families with eviction,” said Brown. “Our bill will help prevent corporate landlords from driving up local housing prices, and put power back in the hands of working families, who need a safe, affordable place to live and raise their children.”

“In Oregon and all across the country, typical Americans who just want affordable housing are getting outmuscled by Wall Street investors that are buying up homes and hiking up rents,” Wyden said. “America's housing policy desperately needs a remodel, and by looking out for the interests of working people and the middle class, this bill represents a key part of the blueprints.”

“Without an affordable, safe place to live, nothing else in your life works. Not your job, your health, education or family,” said Smith. “We know the housing crisis is hurting far too many Americans, and big corporate investors and private equity firms are driving up costs even more by buying up greater shares of the market and crowding out regular families. This bill would limit the subsidies these companies receive, which give them an unfair advantage in the market and put homeownership and affordable housing out of reach for an increasing number of Americans.” 

“In every corner of the country, giant financial corporations are buying up housing, taking advantage of big tax breaks, and driving up both rents and home prices,” said Merkley. “The affordable housing crisis that so many of our communities are facing is leaving working families behind, and private businesses who are snatching up any available homes to pad their own real estate portfolios are pouring fuel on this already out-of-control fire. The housing in our neighborhoods should be homes for people, not profit centers for Wall Street. It’s past time we ended the tax subsidy supporting these investors.”

“We already have an affordable housing crisis: prices have climbed dramatically and supply is short. Deep-pocketed large investors with cash to burn only add fuel to an already raging fire.  Our bill would combat this practice, put households above wealthy companies, and protect first-time and other homebuyers,” said Reed.

“Currently, predatory real estate investors can buy up single family homes and flip them into pricy rental properties to make massive profits with few consequences. Their profit comes at the expense of our already tenuous housing market. The current tax structure rewards this behavior – which leads to fewer affordable homes on the market, and real estate investors keep getting richer. This bill will end the federal tax break for this practice — and incentivize investors to put houses they do own back onto the market to expand housing availability and bring prices down,” said Fetterman.

“When Wall Street investors buy up houses in Wisconsin, they drive up rent and lock out hard working families from affordable housing. By eliminating tax incentives for out-of-state landlords and wealthy investors who are only interested in their bottom line, we can better ensure Wisconsin families are able to buy a home in their neighborhoods and create stronger communities,” said Senator Baldwin. “I am proud to work to expand access to affordable housing for working families and first-time homebuyers and prevent wealthy out-of-state investors from snatching up homes and pricing Wisconsinites out of the communities they love.”

Private equity and other Wall Street-backed outside investors are a growing problem in local housing markets, and contribute to pushing home ownership further out of reach for many working families. In 2021, 16% of homes in Cleveland, Ohio were purchased by investors, with one zip code reaching 70%. In Cincinnati, they bought 15% of homes and nearly 50% of homes in some communities, and a single company bought 29 homes on a single street. Large investors use technology and all-cash offers to outcompete individual buyers. And because investors often target the same types of affordable starter homes as first-time homebuyers, they push families out of the housing market.

The Stop Predatory Investing Act is supported by the National Association of Local Housing Finance Agencies, Americans for Financial Reform (AFR), Enterprise Community Partners, the Local Initiatives Support Corporation (LISC), the National Community Stabilization Trust (NCST), the National Housing Law Project (NHLP), the National Low Income Housing Coalition (NLIHC), and the National Housing Resource Center (NHRC). 

"With home prices at record levels, many US families are finding homeownership increasingly out of reach, especially when they must compete with deep-pocketed investors seeking to buy more homes for their portfolios. Yet our tax code currently gives private equity landlords and big investors generous tax breaks for acquiring homes, even though their actions are driving up rents and reducing housing supply. The Stop Predatory Investing Act will give regular Americans a hand in the housing market by removing interest and depreciation deductions for large investors while making our tax code fairer" said Caroline Nagy, Senior Policy Counsel at Americans for Financial Reform.

“The predatory practices of institutional investors who buy out single-family homes is a rapidly developing issue in affordable housing policy, and one that must be addressed head-on to protect the rights of tenants and help preserve the nation’s supply of affordable housing,” said NLIHC’s President and CEO Diane Yentel. “I applaud Senator Brown for his vision and leadership in introducing the ‘Stop Predatory Investments Act,’ which will help ensure investors do not buy up available properties only to raise rents and displace tenants.”  

“NALHFA has been working diligently with Senator Brown for the last several months and commend his leadership in introducing the Stop Predatory Investing Act,” said National Association of Local Housing Finance Agencies (NALHFA) Executive Director Jonathan Paine. “This legislation represents a critical step in safeguarding the long-term affordability and stability of our communities, empowering local government to protect single-family affordable housing stock, and preserve the well-being of low-income individuals and families. Senator Brown’s efforts will aid equitable and sustainable housing solutions that prioritize the needs of our communities over profit-driven interests."

“We applaud Senator Brown for introducing the Stop Predatory Investing Act,” said Kristen Baker, Executive Director of LISC Greater Cincinnati.  “Approximately one in six homes in Ohio are owned by institutional investors, including 4,000 homes in Cincinnati. We know from our experience in Cincinnati that the transfer of ownership and control of local housing to large institutional investors has resulted in decreased maintenance of properties and aggressive eviction practices from long distance, corporate landlords; and that it also denies homeownership opportunities for families in those communities. We agree with Senator Brown that these activities should not be subsidized by the Federal government and we support his sensible reforms to the tax code to help discourage these pernicious practices.”

"Everyone deserves to have access to a home they can afford. As a national nonprofit with more than 40 years' experience making good homes possible for the millions of families without one, Enterprise commends Chairman Brown for introducing this important proposal to protect housing affordability and stability nationwide. We must all work together to address the severe affordable homeownership and rental shortages facing our communities, and this bill is a step in the right direction,” said Andrew Jakabovics, Vice President of Policy Development, Enterprise Community Partners.

The Stop Predatory Investing Act will:

  • Prohibit an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties.
  • Incentivize big investors to sell single-family rental homes back to homeowners or nonprofits in the community.
  • Support affordable rental housing and the construction of new housing supply by allowing owners to continue to take deductions on properties that are financed using Low-Income Housing Tax Credits or that are newly constructed for rental.
  • Protect renters who live in existing single-family rental housing by not disallowing deductions for single-family rental homes purchased before enactment.

Legislative text of the Stop Predatory Investing Act can be found here, and a summary of the bill can be found here.

Brown has long fought to protect Ohio’s homeowners and renters from bad actors in the housing market and to improve access to affordable homeownership. In April, Brown held a hearing discussing a number of solutions to address the affordable housing crisis in both Ohio and around the country. In October 2021February 2022, and August 2022, Brown held hearings about the growing role of institutional investors in the rental housing market, including institutional investors buying up single-family rental housing and manufactured housing communities. In those hearings, the Committee heard from Cleveland’s Director of Building and Housing Sally Martin and the Port of Greater Cincinnati Development Authority President and CEO Laura Brunner about the harm that investors have caused Ohio communities, renters, and aspiring homeowners. Brown also held a listening session where tenants from across the country described the harm they’d experienced renting from institutional investor landlords.