By Henry Ashcroft
WASHINGTON — The Treasury Department has proposed the rules that will govern a new federal ban on large institutional investors buying single-family homes, laying out how Wall Street landlords can still build, renovate and sell houses under the law, and how much they could be fined if they cross the line.
The notice of proposed rulemaking, published in the Federal Register on Friday, implements Section 1001 of the ROAD to Housing Act, which was enacted on July 11, 2026. Starting Jan. 7, 2027, a large institutional investor generally may not buy, or contract to buy, a single-family home unless the deal qualifies as an “excepted purchase,” according to a Treasury news release.
“Under President Trump, this Administration continues to restore the path to affordable homeownership for millions of young and working families,” Treasury Secretary Scott Bessent said. “Treasury is working to ensure American families and workers have a fair shot at purchasing homes in their communities by increasing housing supply and limiting large institutional investors’ role in the market, while supporting a strong, stable housing market and avoiding unnecessary disruption.”
Treasury said the law codifies key requirements of President Donald Trump’s Executive Order 14376, “Stopping Wall Street from Competing with Main Street Homebuyers.” On Thursday, Trump also signed a separate order on mortgage insurance and refinancing costs.
Who is covered
The law defines a large institutional investor in part as an entity in the business of investing in, owning, renting, managing or holding single-family homes that has direct or indirect investment control over at least 350 of them. Treasury’s proposal would clarify that an entity is “in the business of” owning homes when it does so for income or financial gain, “and not incidentally to a different business,” and would define when an investor counts as a passive investor in another entity.
The law allows several kinds of excepted purchases: build-to-rent programs, renovate-to-rent programs, homeownership programs and programs to boost homeownership. The proposal fills in the details.
Build, renovate or help renters buy
Build-to-rent. A qualifying purchase would be a home that has never been occupied by an owner, is bought within 18 months of receiving its certificate of occupancy, and is first occupied by renters, whether in an all-rental community or a mixed one.
Renovate-to-rent. An investor could buy a home that does “not meet structural or core system elements of local building codes at the time of purchase,” as long as it fixes all material deficiencies and spends at least 15% of the home’s price on improvements. Treasury proposes a safe harbor: spending at least 10% on structural or core system work, while resolving all material deficiencies in those systems, would count as substantial rehabilitation. The “price of the home” for this test would be the purchase price minus the tax-assessed value of the land.
Homeownership programs. Investors could keep buying if they rent under contracts that report on-time rent to credit bureaus, give renters a right to buy and provide “meaningful financial support” toward a purchase. The proposed safe harbor is support of at least the lesser of $5,000 or a percentage of the price, 2.5% for a renter of five years and 3.5% for a renter of seven, measured against the lesser of the purchase price and the county’s Federal Housing Administration loan limit. Renters would also get a 30-day “first look” and a right of first refusal to match a third-party offer.
The law sets civil penalties of up to the greater of $1 million or three times the purchase price. The proposal would clarify how that cap works when one prohibited purchase involves more than one large investor.
Treasury said its approach “seeks to provide clarity without unnecessary disruption to housing supply, homebuilding, rehabilitation activity, or capital formation.” Comments are due by Nov. 23, 2026.
New York already has its own rule
New York moved first. On May 9, 2025, Gov. Kathy Hochul signed the state budget housing bill, A3009C, which since July 1, 2025, has barred certain institutional investors from buying or offering on a one- or two-family home until it has been listed for sale to the public for 90 days, according to an analysis by the law firm McDermott Will & Schulte. If a seller changes the asking price, the 90-day clock restarts.
The New York law reaches much smaller players than the federal rule. It applies to entities that own 10 or more one- or two-family homes, pool investor money as fiduciaries, and meet an asset threshold, which the governor’s office put at $30 million. It also bars those entities from taking state depreciation or interest deductions on such homes. Hochul said at the signing that “New Yorkers deserve a fair chance at achieving the American dream,” according to her office.
A tougher state proposal, Senate Bill S1572, the “End Hedge Fund Control of New York Homes Act,” would force certain pooled investment vehicles to divest homes of one to four units over 10 years and tax future purchases at 50% of fair market value. It had not moved in committee as of the McDermott analysis.
The Buffalo angle
For Buffalo, where much of the housing stock dates to the early 20th century, the renovate-to-rent exception could be the most consequential piece. As proposed, it would let the largest investors keep buying houses that fail local codes on structure or core systems, if they bring them up to code and spend a set share of the price doing it. Because the test subtracts assessed land value, the spending threshold would be measured against the value of the house itself.
Supporters of the approach, including Treasury, describe it as a way to bring “neglected homes back into the housing supply and up to code.” How Treasury defines “material deficiencies,” and how it checks the spending, will matter in older cities, because the exception is where much large-investor buying in a city like Buffalo could continue.
Smaller local landlords with fewer than 350 homes would not be covered by the federal ban at all, though some may be covered by New York’s 90-day rule.
The Buffalo Chronicle has asked Treasury and the White House how the department plans to verify renovate-to-rent spending and how the federal rule will interact with state laws such as New York’s.
Featured image: The U.S. Treasury Building in Washington. Photo by Wisneyykarin, CC BY-SA 4.0, via Wikimedia Commons.
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