Treasury Proposed Rule Clarifies Implementation of 21st Century ROAD to Housing Act
The U.S. Department of the Treasury (Treasury) recently issued a notice of proposed rulemaking to implement section 1001 of the 21st Century ROAD to Housing Act (Act), which imposes certain prohibitions and requirements on large institutional investors in connection with single-family homes.
Upon the effective date of such prohibitions and requirements (January 7, 2027), the section prohibits large institutional investors (generally including entities that engage in certain activities and have investment control of not less than 350 single-family homes) from purchasing single-family homes, subject to certain exceptions.
The proposed rule, among other things, aims to clarify the meaning and application of certain terms relevant to the prohibition and the application of certain related exceptions, including the following:
- Engaged “in the business of” – the proposed rule clarifies when an entity’s activity of investing in, owning, renting, managing, or holding single-family homes for certain purposes could bring it within the definition of a large institutional investor, and when activity that is solely on a temporary or incidental basis in furtherance of a different bona fide business may fall outside that definition.
- Passive investor status – the proposed rule defines circumstances under which an investor that has certain ownership or control of an entity owning the single-family homes would not be treated as a large institutional investor based on the absence of certain management overlap or property control rights in the other entity.
- Various program-based excepted purchases (identifying the terms that constitute a “program” for these purposes):
- Build-to-rent – the proposed rule sets out criteria under which purchases pursuant to a build-to-rent program (where the investor purchases, constructs, or constructs and retains a newly constructed single-family home to be managed as a rental property) may qualify as excepted purchases, clarifying when properties are considered newly constructed for purposes of the exception.
- Renovate-to-rent – the proposed rule describes conditions under which purchases made pursuant to a renovate-to-rent program may qualify as excepted purchases, including requirements related to rehabilitation and improvement thresholds and providing a related safe harbor.
- Homeownership programs and programs to boost homeownership – the proposed rule clarifies the program elements and contractual requirements between the investor and its renters that would need to be present for purchases under these exceptions to qualify, including what constitutes relevant meaningful financial support under each program.
- Build-to-rent – the proposed rule sets out criteria under which purchases pursuant to a build-to-rent program (where the investor purchases, constructs, or constructs and retains a newly constructed single-family home to be managed as a rental property) may qualify as excepted purchases, clarifying when properties are considered newly constructed for purposes of the exception.
- Various scenario-related excepted purchases, including purchases in connection with the satisfaction of debts previously contracted, for the purpose of loss mitigation or compliance with servicing or investor obligations, or from another large institutional investor.
The proposed rule also addresses enforcement considerations involving a single-family home purchase with respect to more than one large institutional investor and severability of the proposed rule provisions.
Treasury is taking a phased implementation approach, given the short period between the Act’s enactment and the January 7, 2027, effective date of the prohibition. Future rulemakings may address other elements of the statute, such as the other excepted-purchase categories, compliance procedures, reporting and recordkeeping, and enforcement actions. Comments on the proposed rule must be received by November 23, 2026.
