The Treasury Department has put out its proposed rules for the new federal limit on big investors buying single-family homes, and the details matter for builders who sell to rental operators and remodelers who fix up distressed houses (via U.S. Department of the Treasury).
The rules carry out Section 1001 of the 21st Century ROAD to Housing Act, the housing package that became law July 11 after passing the Senate 85-5 and the House 358-32. Starting Jan. 7, 2027, a "large institutional investor" generally can't buy, or sign a contract to buy, a single-family home unless the deal fits one of the law's exceptions.
Under the proposal, a large institutional investor is an entity in the business of investing in, owning, renting, managing or holding single-family homes that has direct or indirect investment control over at least 350 of them. Treasury says "in the business of" means holding homes to earn income, not incidentally to some other business. The proposed rule was published in the Federal Register on Oct. 23, and comments are due Nov. 23, America's Credit Unions reported.
The penalty is steep. The law caps it at the greater of $1 million or three times the purchase price, according to the proposed rule.
For homebuilders, the biggest question was whether the ban would choke off sales to build-to-rent operators. It doesn't, as long as the deal meets three tests in the proposal. The home can't have been lived in by an owner-occupant before the sale. The investor has to buy it within 18 months of the home getting its certificate of occupancy. And the first person to live in it after the sale has to be a renter.
Treasury didn't propose a minimum rental period, and nothing in the proposal stops the investor from selling the home later.
The second exception, renovate-to-rent, is aimed at homes that need real work. To qualify, a home has to fall short of the structural or core system requirements of the local building code when the investor buys it, and the investor has to fix all the material deficiencies. Total improvements have to equal at least 15% of the purchase price.
The proposal also offers a safe harbor: if at least 10% of the price goes into structural or core system work that clears those deficiencies, and total improvements still hit 15%, the purchase is covered. Treasury didn't propose a deadline for finishing the work, but it's asking whether one, such as six months, should be added.
Investors can also buy through homeownership programs that give a renter meaningful financial help toward buying the home, along with a right to buy at no more than fair market value minus that help. The proposal also covers a right of first refusal and a 30-day first-look period, and clears up how deals tied to previously contracted debts and loss mitigation, transfers between large investors and passive stakes are treated.
"Treasury is working to ensure American families and workers have a fair shot at purchasing homes in their communities," Treasury Secretary Scott Bessent said in the release.
Comments can be filed at regulations.gov under docket TREAS-DO-2026-0529.
Why it matters for Contractors
If you build spec homes, the main takeaway is that big rental buyers aren't going away, but the clock matters. A large investor can still buy your new house, as long as no owner has lived in it and the sale closes within 18 months of the certificate of occupancy. If a fund is lined up to take a block of homes, put that timeline in the contract.
Remodelers could see more rehab work out of this. The renovate-to-rent rule pushes big investors toward homes that don't meet code and sets a floor of 15% of the purchase price on improvements, with at least 10% on structural and core systems in the safe harbor. Those are real scopes: roofs, foundations, electrical, plumbing and HVAC. Documenting code deficiencies before work starts, and the cost of fixing them, is the kind of paperwork these buyers will now need.
Flippers should read the fine print. As proposed, the renovate-to-rent exception is written around homes that fall short of code when the investor buys them, so a house that's already been fixed up may not qualify. If selling finished flips to large funds is part of your business model, this is worth a comment before Nov. 23, and maybe a call to your accountant or attorney.