Despite securing carve-outs from the 21st Century ROAD to Housing Act‘s institutional investor ban, build-to-rent (BTR) and single-family rental (SFR) operators continue to grapple with lingering legislative uncertainty that weighs on capital availability and new construction, both of which dramatically lag 2025 levels.
According to the National Apartment Association’s Q3 2026 Market Pulse, released Nov. 5, BTR units under construction fell 18.5% year over year, newly completed units declined 40.2% and sales volume of communities dropped 51.5%. Even against a broader nationwide slowdown in residential construction, the declining BTR pipeline continues to stand out.
The industry’s legislative uncertainty initially stemmed from an earlier version of ROAD, first introduced in March, that would have required investors and developers to sell newly built rental homes to individual buyers after seven years. The provision, among others, threatened the viability of the BTR business model, prompting investors to pull back from committing capital to new projects.
Although the final version of ROAD exempted and protected BTR, uncertainty remains around how Treasury will implement the institutional investor ban, along with the potential for new federal and state legislation that could impose further institutional ownership restrictions. That lingering uncertainty continues to weigh on capital flowing into the industry.
“I would say it hasn’t normalized. In other words, it wasn’t where it was a year ago, where capital was really flowing into the business,” Richard Ross, CEO at QuinnResidences, said when discussing the BTR market, in an interview with HousingWire TBD.
“I almost don’t care what the rules are, as long as you tell me what the rules are,” Ross added. “With uncertainty, people just aren’t going to invest.”
Uncertainty is still taking a toll
Ross cited the Strait of Hormuz as a timely and illustrative comparison. While oil is still moving through the Strait, traffic remains more restricted than it was a year ago. BTR, he suggested, finds itself in a comparable position.
“Capital’s coming in, but it’s not like it was pre-ROAD. The hope was that the regulatory process would give some clarity. And I think once it gets done, it will provide clarity, but you might remember this was only part one of the regulatory process,” he said, pointing to the prospects of a “ROAD 2.0” housing bill. “Until capital knows what the rules are, it’s really hard for them to write checks.
According to Sean Dobson, chairman, CEO and CIO at The Amherst Group, a builder, buyer and manager of single-family rentals, the capital environment for BTR had been flashing signs of softening even before the federal government introduced the idea of an institutional investor ban. New projects often came with modest returns, and rent growth was moderating or even falling across many high-growth Sun Belt markets.
Add a steady drumbeat of policy risk from Washington, and many investors have simply taken their money elsewhere.
“When you add policy uncertainty to the asset, it just doesn’t have the return to pay for that,” Dobson said in an interview.
Invitation Homes CEO Dallas Tanner also acknowledged that the capital environment hasn’t bounced back from an uncertain 2026 during the company’s Q3 2026 earnings call on October 29.
“Capital’s just starting to poke its eyes up after the ROAD Act piece of it. The market’s still trying to find itself,” Tanner said.
In a Q3 2026 Form 10-Q document filed with the United States Securities and Exchange Commission (SEC) on November 5, 2026, AMH also called out ongoing legislative uncertainty as a concern.
“Further, the ROAD Act and the prospect of other such laws or regulations have adversely impacted and may in the future continue to adversely impact our access to capital markets and the attractiveness of our securities to certain investors,” the document warned.
The uncertainty surrounding Treasury’s proposed rulemaking
The U.S. Department of the Treasury, which implements the institutional investor ban included in ROAD, released a notice of proposed rulemaking in October that would grant BTR communities a range of notable exemptions from the ban. However, concerns remain about some of Treasury’s proposed interpretations.
“If you read the law as a layman, you’d say, ‘all right, built-to-rent is carved out.’ But then you get this rulemaking, and it’s like you have to pat your belly and tap your head and hop on one foot for the built-to-rent to not be banned,” Dobson said.
Quinn Residences, in an open letter to Treasury, outlined several concerns about Treasury’s proposed rulemaking. Chief among them is a proposal to exempt purpose-built BTR communities from the institutional investor ban provided they haven’t been owner-occupied and are purchased within 18 months of receiving a certificate of occupancy.
Ross argued that this timeline isn’t sufficient, as the 18-month certificate-of-occupancy requirement could prevent institutional investors from acquiring purpose-built rental homes that have been operating as rentals for more than 18 months, even if they have never been owner-occupied. And building and stabilizing a community typically takes about 30 months, longer than the rule allows, Ross argued.
The rule, therefore, could prevent subsequent sales of newly built BTR homes among institutional investors, effectively limiting the pool of potential buyers and potentially discouraging investment into new projects.
Ross also signaled his opposition to another one of Treasury’s proposed rulemakings that would fail to exempt single-plat BTR communities zoned for multifamily use, despite congressional record statements indicating lawmakers intended those properties to be excluded from the ban.
For The Amherst Group, uncertainty continues to obscure how Treasury will define the exception for homes requiring substantial repairs under the ROAD institutional investor ban. Many of Amherst’s acquisitions are older homes, typically 25 to 40 years old, that require substantial renovations. While the renovate-to-rent exception could allow Amherst to continue acquiring and renovating these properties for rent, the lack of finalized parameters has left investors uncertain.
“There’s no money to be raised right now,” Dobson said, of capital for financing renovate-to-rent acquisitions.
What the next Congress could mean for BTR
What’s more, the possibility of a “ROAD 2.0” housing bill raises even more concerns among many BTR operators and developers. They fear they face continued uncertainty and risk over whether future federal or state legislation could restrict the BTR business model.
However, it’s not yet clear whether any such legislation will gain traction in the next Congress. While many successful candidates for the U.S. Senate and the U.S. House of Representatives ran on a platform of opposing institutional ownership of single-family homes, campaign rhetoric and slogans don’t necessarily translate full-stop into policy.
“I worked campaigns for a number of years throughout the country, and the first thing they kind of teach you in campaigning out there is everyone needs a boogeyman. I think you campaign in slogans, and you govern in prose,” Owen Caine, Assistant Vice President of Federal Legislative Affairs at the National Apartment Association (NAA), said in an interview.
Despite the expectation that some members of Congress may push for more aggressive institutional ownership restrictions, Cain was encouraged by the widespread bipartisan pushback against previous provisions that would have undermined BTR. Caine hopes this bipartisan support will keep Congress from passing such far-reaching legislation in the future.
“The fact that we got to where we were with such bipartisan support, and with basically complete industry and nonprofit support, [means] messing around with that at this point, before it’s been fully implemented and before we’ve seen any benefits of the bill whatsoever, doesn’t make a lot of sense from a policy perspective,” he explained.
However, the new Congress comes with another challenge — the sheer size of the incoming freshman class. In the House of Representatives, for example, about 110 new representatives are expected, along with new staff members.
“Those are each offices we have to hit individually to educate about build-to-rent because the odds that the average person has any idea what a build-to-rent development is, is pretty low,” Caine explained.
Ross noted that lawmakers are usually receptive once they learn more about BTR and the legislative challenges facing the industry. A recent meeting with Senator-elect Roy Cooper (D-N.C.) was one example, with Cooper responding positively to those concerns.
“I spent 30 minutes with him personally, explaining what build-to-rent was. He said, ‘Oh, I understand. That makes sense.’ So that’s just something that everyone in this business will have to do again,” Ross explained.
State policy: another risk to watch
While much of the attention has focused on federal legislation, state-level policy, particularly proposals to restrict institutional investors, may be just as critical an area to watch.
While it’s not clear what the newly elected state legislatures and governors may prioritize, several states have already considered bills limiting the influence of institutional ownership of housing.
In Virginia, for example, state lawmakers from both parties introduced legislation to restrict institutional home purchases. SB 693 and SB 1424 would have prohibited entities with more than $50 million in assets under management from buying single-family homes, but neither bill passed.
In Michigan, however, a similar measure, HB 6074, was signed into law on July 21, 2026. The bill prohibits corporations with a net worth of $375 million or more from owning more than 100 single-family homes in the state, while explicitly exempting build-to-rent (BTR) properties.
As more states consider restrictions on institutional ownership of single-family homes, will BTR secure the exemptions achieved in Michigan, or could operators face a tougher legislative environment in Congress and in other state legislatures?
That’s a key question to watch in 2027 and beyond.
