A Bumpy Road for the 21st Century ROAD to Housing Act
Industry groups say that some provisions are counterproductive to the bill's goals.
The 21st Century ROAD to Housing Act has passed the Senate by a vote of 89-10. The bill combines provisions from the House-passed Housing for the 21st Century and the Senate’s ROAD to Housing Act, both aimed at boosting the nation’s supply of affordable housing.
According to reporting from The New York Times, it’s the most significant piece of housing legislation to pass in 36 years.
In addition to including provisions attempting to streamline housing development nationwide, the bill also includes sections targeting institutional ownership of single-family rentals, in addition to changes to Federal Housing Administration loan limits.
The House of Representatives passed its own version of the bill by a vote of 390-9 this past February. Multiple industry groups were in favor of the passage, which included sections pertaining to land-use, zoning, regulatory reforms and financing tools to achieve more affordable housing.
What provisions are included in the package?
Other provisions in the new bill include Sections 202, 205 and 208, respectively known as the Increasing Housing Opportunity Zones, Build Now Act and the Unlocking Housing Supply Through Streamlined and Modernized Reviews Act. Each tackles different hurdles of construction. Section 202 allows the HUD Secretary to prioritize grant funding for housing projects in Opportunity Zones, while the Build Now Act introduces a pilot program for development in Community Development Block Grant areas. Lastly, Section 208 streamlines National Environmental Policy Act reviews for small and infill housing projects.
Additionally, Section 502 reforms and reauthorizes the HOME Investment Partnerships Program, making updates aimed at improving program administration and facilitating the construction of more affordable housing nationwide.
Title 3 of the package includes provisions to expand manufactured housing, including removing the permanent chassis requirement for manufactured homes and reauthorizing Preservation and Reinvestment for Community Enhancement grants to fund repairs at existing communities. This will give the sector more flexibility on location and design while reducing construction costs.
Affordable housing preservation is addressed under Section 201 as the bill lifts the cap of the Rental Housing Assistance Demonstration program. This program also extends existing protections for renters.
The bill faces an uncertain future, as the proposed package needs to go through the House and the president before being signed into law.
Which sections are raising the most concerns?
Section 901 of the bill, titled “Homes Are For People, Not Corporations”, has organizations such as the Mortgage Bankers Association, The Real Estate Roundtable, The National Multifamily Housing Council and the National Apartment Association calling for changes. The section limits institutional investors from purchasing single-family housing.
According to the bill text, the provision states that firms that own more than 350 homes are unable to purchase additional properties. The bill provides carve-outs for some build-to-rent projects, but those properties would need to be sold within seven years.
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After the Senate vote, the MBA released a statement saying that this provision could affect long-term investment in the rental housing market. NMHC and NAA released a joint statement that also cited Section 901 as an issue that could bottleneck supply.
In the statement, the two organizations requested to eliminate the section, arguing that it would affect the housing supply, affordability and investment in the sector. The Real Estate Roundtable shared in its statement that this provision itself limits housing options, making it counterproductive to the overall goal of the housing package.
“The disposition provision would ultimately reduce overall supply and exacerbate housing affordability challenges across the board,” NAA’s Greg Brown, senior vice president of government affairs, told Multi-Housing News. “The provision creates an artificial incentive for housing investment to move away from a housing option that individuals and families want as evidenced by the growth in demand for single-family rentals.”
Putting these limitations around build-to-rent communities and single-family rentals comes at a time when would-be buyers are choosing to rent. A survey from the Center for Generational Kinetics of 1,000 participants found that 42 percent of renters said they chose to rent because it’s cheaper than buying a home.
MBA has also flagged what it referred to as a “drafting error” for Section 213 of the package. The section aims to raise the limits for FHA-insured multifamily construction loans to align with current construction costs, which would attract more private capital and increase supply. However, MBA argues that, as drafted, the updated section would lower loan limits below current levels, and the association urges the section to be revised.
