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

As Congress examines and debates the 21st Century Road to Housing Act, the Terner Center was asked to provide feedback to staff on the potential impacts of the legislation’s language on Built to Rent (BTR) communities. Terner Center summarized the role that BTR plays in the broader housing market and provided a quick analysis on how Section 901 of the Act may limit the development of BTR communities. We also suggest alternative policy paths to increase access to homeownership, as well as our broad assessment of the 21st Century Road to Housing Act’s importance to increasing supply overall.

To: United States Senate Committee on Banking, Housing, and Urban Affairs staff
From: Terner Center for Housing Innovation at the University of California, Berkeley
Re: Section 901 of the 21st Century Road to Housing Act
Date: March 7, 2026

Dear Senate Committee on Banking, Housing, and Urban Affairs staff:

Thank you for the opportunity to comment on the 21st Century Road to Housing Act. Our staff at the Terner Center has compiled the following high-level analysis of the potential impact of Section 901, which applies specifically to “Build to Rent” (BTR) residential ownership and development. We have also included an opinion on the potential impact of the Act on housing supply overall.

Build to Rent: Prevalence and Market

BTR homes make up an overall small portion of the total single-family home market, though in recent years, BTRs have become a greater share of new single-family home starts and an important supply of new homes overall. BTRs comprise roughly 1 percent of the overall stock of single-family homes^[1] and 1 to 2 percent of the overall rental market.^[2] Of new supply, BTRs comprised roughly 7 percent of new single-family homes built in 2023.^[3] Census data, as tabulated by the National Association of Homebuilders, indicates that BTR starts have ranged from roughly 60,000 units in 2021 to around 90,000 units in 2024^[4] (while total 2025 data is not fully available, currently available data indicates roughly the same amount of new BTRs were built in 2025 as 2024^[5]). Some industry analysis indicates that these numbers may be higher depending on how BTR development is measured, though 2025 and 2026 starts may have slowed given higher interest rates and construction costs.

It is important to understand that the BTRs can serve an important segment of the overall rental market: households that cannot access homeownership (for example, credit impaired households or those lacking resources to support a down payment) but prefer the single-family home typology or households that only intend to live in a community for a shorter period of time. In many cases, BTR communities can offer access to amenity rich areas where traditional multifamily rental development is prohibited by zoning rules. Any provisions that would limit the development of new BTR communities is likely to further limit housing choice for these households and deleteriously impact new home development overall.

Section 901: Potential Impacts

Section 901 of the 21st Century Road to Housing Act includes provisions that would require “large institutional investors” to sell any newly constructed BTR single-family homes within seven years of completion. While there are no specific restrictions on the development of new BTRs, the disposition requirement would likely have a chilling effect on the BTR industry and therefore risks reducing the development of new rental housing supply. This is because any disposition requirement introduces significant risk to the builder and its capital providers. While the disposition of newly built assets is not uncommon in multifamily development, an explicit time limit could force BTR companies to sell during uncertain economic conditions. Because of this risk, it would be extremely difficult for builders to access capital to fund BTR communities. While there may be some substitution effect (i.e., some BTR companies may instead opt to build for-sale single-family homes), a shift from BTR development to for-sale would likely be small as the economics behind the two development types are markedly different. More likely, new homes under consideration by BTR companies simply would not be built at all.

Some BTR development is not built for disposition, and the Act’s requirement at year 7 for disposition would introduce regulatory issues with regards to local zoning and land use rules. For example, a BTR community would not be required to legally subdivide individual units, as would be required with for-sale homes. Undertaking this process years after project completion also introduces risk as local approval processes could take years, requiring extra public hearings and with no guarantee of approval. These downstream risks would further chill investor and lender interest in BTRs.

Section (4)(a)(i) notes that the Department of the Treasury would be required to issue rules with a specific requirement to “minimize market disruptions.” Such rulemaking could provide clarity to builders and reduce risk. However, rulemaking often takes years, and in the interim, banks are likely to be reluctant to lend on BTR projects while guidance is pending.

It should be noted that Section 901 does not necessarily require the disposition, as the language currently requires owners to offer the unit for sale. In theory, an owner could set the sales price at a level that is out of reach for any buyer, and if no buyer emerges, the owner “shall be considered to be in compliance with the disposal requirements under paragraph (1).” However, this strategy would not fully satisfy risk-averse lenders and investors and many BTR developers are unlikely to pursue such a path and may be depending on rules issued by the Department of Treasury.

Regarding tenants of BTR, it is likely that a disposition requirement would result in the removal of a renting household in order to dispose of the unit to prepare for an owner-occupant, assuming that the renting household cannot afford to purchase the unit through the “first-look” requirement. In states and municipalities with limited or no tenant protections, the disposition requirement could result in evictions.

21st Century Road to Housing Act: Impact on Supply Overall

The Act is likely to have a positive impact on housing supply overall, though it is difficult to quantify what the impact may be given the various provisions of the Act which all impact supply in different ways. In an August 2025 commentary,^[1] we discussed some of these potential impacts. There are several provisions that specifically lead to great investment in new housing supply, including Section 201 (expansion of the Rental Assistance Demonstration program), Section 204 (expansion of the Public Welfare Investment cap for banks), Section 206 (allowing Community Development Block Grants to pay for new construction), Section 210 (new funding for infrastructure and housing), and Section 502 (expanding HOME program funding). Other provisions will indirectly lead to greater housing supply by lowering costs or restructuring existing funding sources to apply to more typologies or work more efficiently, such as Section 207/208 (streamlining regulations associated with federal funding sources), Section 213 (updating FHFA multifamily lending amounts), Section 301 (removing the permanent chassis requirement for factory built housing), and Section 303 (expanding access to financing for manufactured housing). Lastly, Section 205 creates a meaningful framework to incentivize high-cost municipalities to increase housing production.

Collectively, these provisions seem likely to have a modestly net positive impact on housing supply over time (assuming appropriations are made available to fund the newly authorized programs); however, in the short term, given Section 901 as drafted, it seems reasonable to expect the opposite—that the immediate effect on new housing supply could in fact be net negative.

Alternative Strategies to Achieve Policy Goals

The goal of Section 901 to provide equal footing for individual homebuyers or smaller investors against private equity activity in the single-family rental market could be achieved through other strategies that would be less immediately disruptive of new BTR supply. For example, providing financial incentives or tax relief to either small owners of rental housing (for example through favorable depreciation or tax credits) or to homebuyers purchasing new homes (for example through refundable tax credits, downpayment assistance programs, or shared appreciation mortgages) would give greater access to the single-family home market while not deterring BTR investment. We would be happy to discuss these or other ideas if that would be of interest.

We appreciate the opportunity to provide our feedback and are grateful for the staff and member’s focus on such an important issue. We look forward to seeing the 21st Century Road to Housing Act evolve and move forward.

Sincerely,
Ben Metcalf, Managing Director
David Garcia, Deputy Director of Policy

Endnotes

^[1] Metcalf, B., & Garcia, D. (2025, August). U.S. Senate Banking Committee advances bipartisan legislation to accelerate housing supply. Terner Center for Housing Innovation.

^[1] Goodman, L., & Kaul, K. (2023). What is the build-to-rent sector, and who does it serve? Urban Institute. www.urban.org

^[2] CBRE Research. (2024). Build-to-rent overview 2024. CBRE. www.cbre.com

^[3] Goodman, L., & Kaul, K. (2023). What is the build-to-rent sector, and who does it serve? Urban Institute. www.urban.org

^[4] National Association of Home Builders. (2024, May). Year-over-year gains for single-family built-for-rent starts. Eye on Housing. eyeonhousing.org

^[5] National Association of Home Builders. (2025, May). Flat growth for single-family built-for-rent. NAHB Now. www.nahb.org