The bipartisan legislation was crafted in both chambers and must now pass the House. It seeks to build more homes and prevent large investors from out-bidding families.
The Senate voted overwhelmingly on Monday to pass a sweeping housing affordability bill aimed at lowering costs, putting Congress on the brink of a rare bipartisan victory in Donald Trump’s second term.
The vote was 85-5.
The legislation, which makes it easier to build homes and slaps limits on Wall Street investors from buying up houses, now goes to the House, which hopes to vote on it in the next few days. Then, it would go to Trump’s desk to be signed into law.
Hah, I was about to comment that there’s no doubt some fine print in there that does still allow a shell company to buy, so while the book looks great, the story is shit!
Is that actually true or are you just assuming this?
I’m lazy so I asked an llm to analyze the text of the bill. I am Jack’s complete lack of surprise:
Yikes. I was speculating based on how easily this is being pushed through…
I did the same. Dueling LLMs. (Gemini Pro for this one.)
🤖 🤖 🤖
Here are the specific safeguards in the text preventing companies from using shell companies or subsidiaries to bypass the cap:
1. The “Aggregate” Rule
The legislation establishes a cap of 350 single-family homes. Crucially, the text defines a “large institutional investor” as any for-profit entity that, “alone or together with other entities,” holds the homes in the aggregate.
If a parent company sets up ten different LLCs and puts 340 homes in each, the law aggregates them. For regulatory purposes, the parent company owns 3,400 homes and is in blatant violation of the ban.
2. A Broad Definition of “Investment Control”
The bill uses a sweeping definition of “investment control” to catch indirect ownership. An entity is counted toward the 350-home cap if it: Owns the home directly.
Has primary investment or management decision-making authority over the home.
Directly or indirectly controls the owning entity (this catches general partners, managing members, investment managers, and advisors). Directly or indirectly owns a significant equity stake (usually defined as over 25%, though explicitly excluding genuinely “passive” investors).
For example: If you own 200 homes through Subsidiary A, 100 homes through Subsidiary B, and you act as the General Partner on a real estate syndication holding 60 homes, your aggregate count is 360. You are over the cap.
3. A Loophole-Free Definition of “Purchase”
Companies cannot use corporate restructuring to sneak homes into their portfolios. The bill defines “purchase” to include any transfer or acquisition of a single-family home. This includes acquiring homes through:
Mergers and acquisitions (buying a company that owns homes counts as buying the homes).
Bulk portfolio purchases.
Foreclosures.
Construction.
4. Severe Financial Penalties
The financial penalties are designed to be punitive enough that testing gray areas isn’t worth the risk. Violations carry a civil penalty of up to $1 million per violation or three times the purchase price of the home, whichever is greater. Buying a $400,000 house in violation of the cap could trigger a $1.2 million fine.
It seems this is mostly covered: controlling the financial manager or over 25% of the entity that controls the homes counts as the company owning the house. But those first level entities wouldn’t be able to buy any more, any way.