Treasury Proposes Rules for the Single-Family Investor Ban

On October 22, 2026, the Department of the Treasury issued a notice of proposed rulemaking, published October 23 at 91 Federal Register 66799 as docket TREAS-DO-2026-0529, that adds a new 31 CFR Part 36. It implements section 1001 of the 21st Century ROAD to Housing Act, which became law on July 11, 2026 and bars a “large institutional investor” from purchasing single-family homes except in listed “excepted purchases.” The statute’s prohibition takes effect 180 days after enactment, which Treasury computes as January 7, 2027. Comments are due November 23, 2026. Treasury says it is issuing the rule to give market participants clarity before that date, and that it may issue further rules on other parts of the statute.

The proposal leaves the statute’s own definitions alone and fills in terms the Act uses without defining. A “program,” the word on which four of the exceptions turn, would mean written policies or procedures adopted before the purchase and reasonably designed and implemented to make every purchase under the program satisfy the Act. A build-to-rent program would cover homes never occupied by an owner before purchase, bought within 18 months of the certificate of occupancy, and first occupied by renters after purchase. A renovate-to-rent program would require resolving material deficiencies in structural or core systems and improvements of at least 15 percent of the home’s purchase price, with a safe harbor at 10 percent spent on those systems. The notice also proposes that a purchase that violates the statute with respect to more than one large investor counts as a single violation for the penalty cap, which the statute sets at the greater of $1 million or three times the purchase price.

The statute’s threshold is 350 homes under direct or indirect investment control, and the Federal Register notice restates the control tests: owning or controlling more than 25 percent of any class of equity in the entity that owns the homes counts unless that owner is a passive investor. Treasury proposes that an entity is passive only if it meets conditions on director and management overlap and property control rights. For a fund sponsor, a lender with equity kickers or a platform with several joint ventures, the open question is no longer only how many homes a vehicle owns but which entities sit above it. A fee-based manager that has no investment control would not be a large institutional investor on that basis alone, according to the notice, though it may still be “in the business of” managing single-family homes.

The 18-month build-to-rent window is the number most likely to change deal structure, and it is a proposal, not a rule. A rental operator forward-purchasing finished homes from a builder would have to close inside that window from the certificate of occupancy, and Treasury asks in Question 34 whether 18 months is the right figure. The notice also asks whether to require investors to certify each purchase. By PSV arithmetic, a $400,000 home bought in violation carries a maximum penalty of $1.2 million, because three times the price exceeds $1 million, so the cap rises with the price rather than stopping at a flat figure. Mayer Brown’s July analysis adds two points from the statute: it does not force a sale of homes owned before enactment, and the prohibition ends 15 years after enactment.

The tool is a ledger, one row per home or per closing, kept before any single-family purchase is signed. Inputs are the purchase contract, the entity chart above the buyer, the written program document, the certificate of occupancy and any prior owner-occupancy record, renovation budgets by building system, and the title history. The model reads those documents and fills in each field with a page reference: which exception is claimed, the certificate of occupancy date, the months from that date to closing, the renovation spend as a share of the purchase price, and the entity path that decides the 350-home count. It computes the dates and ratios and flags any row that is missing a document or falls near a threshold.

The reviewer is the buyer’s securities or real estate counsel, with the head of acquisitions signing the investment decision. The approval gate is that no row is marked excepted by the model. Counsel marks it, and a row with an unresolved field stays blocked. Treasury’s own description of a reasonably designed program, which includes transaction checklists, approval processes, escalation procedures and audit records, reads like a description of this ledger, though the notice does not prescribe a format, and PSV has not tested any firm’s ledger against the final rule.