H.R. 7221: Stopping Wall Street From Competing With Main Street Homebuyers Act

This bill, known as the Stopping Wall Street From Competing With Main Street Homebuyers Act, aims to amend the Investment Company Act of 1940 to impose restrictions on large private funds and registered investment companies regarding their purchase of single-family homes. The key provisions of the bill are as follows:

Restrictions on Purchasing Single Family Homes

The bill sets out to prohibit certain types of funds from buying single-family homes. Specifically, it does the following:

• Effective Date: The restrictions will begin 90 days after the bill is enacted.
• Prohibition on Purchases: Large funds, referred to as "covered funds," will not be allowed to purchase single-family homes starting from the effective date.

Divestment Requirements

For covered funds that currently own single-family homes, the bill mandates a divestment process:

• 10-Year Timeline: These funds must divest of all single-family homes within 10 years after the enactment of this section.
• Phased Divestment: If a covered fund owns single-family homes at the time the bill is enacted, it must divest at least 10% of its holdings each year for the following 10 years.

Definitions

To clarify the bill, several terms are defined:

• Covered Fund: This includes a registered investment company, real estate investment trust, or private fund that meets one of the following criteria:
  • Has more than $500,000,000 in assets under management.
  • Owned 100 or more single-family homes in the previous year or purchased more than 5 in a 30-day period.
• Private Fund: Any issuer that would qualify as an investment company but for certain exceptions.
• Single Family Home: Defined as a residential structure or mobile home that is meant for one family unit.

Purpose of the Bill

The main intent behind the bill is to reduce competition between large investment funds and individual homebuyers in the single-family home market. The proponents believe that limiting the purchasing power of large funds will help make it easier for everyday buyers to purchase homes and improve access to affordable housing.

Relevant Companies

• INVH: Invitation Homes may be impacted as it currently owns and manages a large portfolio of single-family homes.
• AMH: American Homes 4 Rent could also be affected since it operates in the single-family rental market and may have to divest a significant number of homes.
• PSA: Public Storage, with holdings in residential properties, might face challenges in their investment strategies related to single-family homes.