End of the Wall Street landlord? Lawmakers take aim at hedge funds scooping up family homes to rent out

US lawmakers are clamping down on Wall Street landlords after they spent billions of dollars scooping up family homes during the pandemic.

Democrats in the Senate and House are sponsoring legislation which would force investment funds that own single-family homes to sell up. In Ohio, a Republican-led bill could drive out institutional owners through taxation. 

Companies backed by Wall Street have been on a home-buying frenzy in recent years. In 2022, more than one in every four single-family home sold was bought by an investment firm.

Two of the largest companies are Invitation Homes and AMH, both publicly-traded companies. Both count giant asset mangers like BlackRock and hedge funds as investors.

In a presentation last month, Invitation Homes labelled itself 'the nation's premier single-family home leasing and management company.'

Two of the largest firms are Invitation Homes and AMH - both publicly-traded companies. Pictured: Invitation Homes CEO Dylan Tanner (left) and AMH co-founder David Singelyn (right) 

In an investor presentation last month, Invitation Homes labelled itself 'the nation's premier single-family home leasing and management company.' Pictured: An Invitation Homes property advertised for $2,799 a month in Atlanta 

It notes that in its 16 core markets it is more affordable to lease a home than buy, according to real estate research firm John Burns.

A number of other companies - backed by private equity - hold portfolios of tens of thousands of homes nationwide. 

Such firms claim to offer renters the opportunity to live in desirable neighborhoods where they cannot afford to buy. 

But plummeting affordability has encouraged politicians at all levels to be more vocal about housing issues. Getting young people on the housing ladder has been key part of President Biden's bid for re-election.

The median sale price of a US home now $420,321, according to Redfin, while mortgage rates are above 7 percent. Figures from Zillow show the median rent for all property types is $2,100 a month. 

Republican Governor Greg Abbott wrote on X last month: 'I strongly support free markets. But this corporate, large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. 

'This must be added to the legislative agenda to protect Texan families.'

However, politicians face an uphill battle getting their proposals through. None of the bills in Congress or any of the state houses has so far reached a floor vote. 

Republican Governor Greg Abbott wrote on X last month: 'I strongly support free markets. But this corporate, large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home.'

A March 2024 investor presentation from Invitation Homes says it provides a 'unique experience' for renters

Research estimates institutional investors - defined as companies with portfolios of 1,000 homes or more - own between 3 and 5 per cent of rental homes.

But some cities hold much higher proportions. In Atlanta, around 11 percent of rental homes are now owned by three real estate companies, according to recent analysis by researchers at Georgia State University. 

Separate analysis by the US Department of Housing and Urban Development in 2022 shows 21 percent of Atlanta rental homes are owned by a large institution. 

In December, Republican Nikema Williams sponsored the End Hedge Fund Control of American Homes Act in the US House.

However, critics say the trend is already showing signs of slowing, with investors buying few to no homes in the past year. 

John Burns, founder of his eponymous research firm, is quoted in the Wall Street Journal as saying: 'The great trade is done. So, what are you trying to stop?' 

Some campaigning bodies - including the National Rental Home Council - also oppose a crackdown on Wall Street landlords. Pictured: a home up for rent on the Invitation Homes website 

Research estimates institutional investors - defined as companies with portfolios of 1,000 homes or more - own between 3 and 5 per cent of rental homes

Bills in the House and Senate plan to cap rental-home ownership at no more than 50 homes for some companies.

A separate bill in Minnesota will limit ownership to 20 homes.

Meanwhile bills to block landlords in the Ohio and Nebraska state legislatures were written after investors bought up hundreds of homes in a handful of Cincinnati and Omaha neighborhoods.

Republican Louis Blessing III, who represents the suburbs of Cincinatti in the Ohio Senate, has introduced a bill to tax large landlords with the hope of them selling up as a result.

He told the WSJ: 'It's an antitrust in spirit bill.' 

DailyMail.com reached out to AMH and Invitation Homes for comment but was referred to the National Rental Home Council.

A spokesman for the body said: 'The arguments underpinning the call for these types of restrictions are simply not based on fact and reflect neither the reality of today’s housing market or the needs of housing consumers. 

'The villain is affordability, driven by an unprecedented lack of supply and 7%+ mortgage rates, not housing providers.'