A Message From MIP Capital Partners Regarding Trump's Announcement
Dear Investors,
As you may be aware, on Wednesday morning, President Trump announced his intention to restrict large institutional investors from buying single-family homes.
The proclamation was light on details and raises many questions surrounding feasibility and implementation, legality, and whether this will happen at all.
While the President’s messaging promised immediate action, the proposed ban on institutional investor home buying will require legislation in Congress and a lengthy process of fleshing out details. There are open questions regarding the threshold for “large” institutions, whether existing single-family rental (SFR) ownership would be grandfathered-in, and how to treat build-to-rent (BTR) investments, to name a few.
We wanted to distill and distribute an initial list of pertinent questions and answers:
Q: What is the likelihood this legislation gets passed?
The probability that a legislative ban on institutional single-family residential (SFR) ownership will pass is fairly low.
While the proposal has bipartisan interest, housing analysts cite significant hurdles, including the need for Congressional approval, potential legal challenges, and a lack of consensus on the plan’s actual impact on housing affordability.
The administration may backtrack on the proclamation following public or private feedback, similar to other proposals, such as 50-year mortgages.
Q: If passed, how would the legislation impact home prices and rents?
At a national level, the legislation would likely have a limited impact on home prices in the near-term.
Only ~1% of single-family homes in the United States are owned by investors that own at least 100 single-family homes.
In certain MSAs, such as Atlanta and Tampa, where institutional ownership is relatively high compared to the national average, a forced institutional sell-off could temporarily put downward pressure on home prices.
However, in the longer-term, preventing institutional investors from owning single-family rental properties would likely exacerbate the supply shortage and put upward pressure on prices.
While single-family build-to-rent is currently only hovering around 8% of total U.S. single-family housing starts, it has driven much of the marginal increase in U.S. single-family housing starts in recent years. If policymakers were to also restrict institutional build-to-rent development, it could have a noticeable negative impact on overall homebuilding later in the decade, in 2027, 2028, and 2029.
At a national level, the legislation would likely put upward pressure on rents, especially for relatively new single-family homes in suburban markets.
Nationally, institutions own ~5% of the single-family rental market overall, and own a disproportionately high share of newer-vintage, Class A single-family rental properties in suburban markets.
Most institutionally owned homes in America are currently occupied, and most of their tenants can’t afford to buy single-family homes right now. If Congress were to force institutions to sell off their housing stock, it could potentially displace thousands of current tenants who would be forced to find alternative rental accommodations in a supply-reduced rental market.
Q: If passed, how would the legislation impact our exit opportunities?
If legislation was passed that prevented large institutions from purchasing single-family rental properties, that would represent a reduction in the breadth of exit options available. Further clarity regarding the definition of “large institutional investors” will be required to properly assess this.
There is a deep and active mid-market for SFR portfolio sales of our property type. These mid-market buyers would likely fall below the threshold of “large institutional investors”.
All of the houses that MIP Capital Partners purchases on behalf of our investors are of sufficient quality to serve as primary homeowner-occupied homes. In the unlikely event that legislation is enacted to curtail the purchasing power of large institutional SFR buyers, primary homeowners remain a viable path for exit. Primary homeowners often maintain the highest ability-to-pay of all single-family buyer types.
To conclude, we believe the likelihood of this legislation passing is fairly low. If enacted, the legislation would likely result in minimal to moderate downward pressure on house prices in the short-term, and would likely result in upward pressure on house prices in the longer-term. The legislation would likely result in upward pressure on rents for our properties. The restriction of large institutions from owning SFRs would reduce the breadth of our exit options, but highly attractive exit options would remain.
As a platform, MIP Capital Partners remains committed to the single-family rental space and to our investors. We will continue to provide updates as more specific information is provided regarding this policy proposal.
Best regards,
Matt Sinclair
Founder, Chief Executive Officer