Terner Center Comments on Build to Rent Provisions of the 21st Century Road to Housing Act

Key Takeaways

• BTR is ~1% of stock, 7% of new builds
• Section 901 forces sale of BTR units within seven years
• Disposition rule likely chills financing and slows BTR development
• Potential tenant evictions if units must be sold to owners
• Alternative tax incentives could protect BTR while expanding homeownership

Summary

The Terner Center submitted comments on Section 901 of the 21st Century Road to Housing Act, which would require large institutional investors to sell newly built built‑to‑rent (BTR) single‑family homes within seven years. While BTR homes represent roughly 1% of the overall single‑family stock, they accounted for about 7% of new single‑family starts in 2023, serving renters who prefer a house‑type dwelling. The disposition requirement is projected to increase financing risk, potentially curbing new BTR projects and reducing rental supply. The Center proposes tax‑based incentives as a less disruptive alternative to achieve homeownership goals.

Pulse Analysis

The built‑to‑rent (BTR) model has emerged as a niche yet increasingly visible part of the U.S. housing ecosystem. Although it comprises only about one percent of the total single‑family inventory, BTR accounted for roughly seven percent of new single‑family starts in 2023, driven by demand from credit‑constrained households and renters seeking suburban amenities. Developers have leveraged institutional capital to scale these projects, positioning BTR as a bridge between traditional multifamily rentals and owner‑occupied homes.

Section 901 of the 21st Century Road to Housing Act introduces a seven‑year disposition requirement for large investors, a clause that could fundamentally alter BTR economics. By mandating a forced sale—or a nominally compliant offering—developers face heightened uncertainty, making lenders wary of extending construction financing. This risk premium may translate into fewer BTR launches, reduced rental inventory, and potential displacement of tenants if owners must transition units to owner‑occupancy. Moreover, the delayed regulatory guidance from Treasury compounds the financing gap, as banks typically await clear rules before committing capital.

Beyond the BTR‑specific language, the broader Act contains several provisions aimed at expanding overall housing supply, such as expanding Rental Assistance Demonstration funding and easing financing for manufactured housing. However, the immediate chilling effect of Section 901 could offset these gains. Policymakers might achieve the intended equity goals through targeted tax credits, depreciation benefits, or down‑payment assistance for small landlords and first‑time buyers, preserving BTR development while promoting homeownership. Such alternatives would maintain the supply pipeline and protect vulnerable renters without imposing abrupt market disruptions.