Build-to-Rent Developers and Investors: Prepare Now Before New ROAD to Housing Act Requirements Kick In on Jan. 7

Build-to-rent (BTR) developers, investors and operators need to prepare for new purchase restrictions and reporting requirements that start on Jan. 7, 2027.

The 21st Century Renewing Opportunity in the American Dream (ROAD) to Housing Act became law July 11, 2026, as Public Law 119-101. Title X of the act restricts “large institutional investors” from purchasing single-family homes, but it expressly preserves qualifying BTR acquisitions and other excepted purchases.

On Oct. 5, 2026, the U.S. Department of the Treasury submitted its draft Title X rule to the Office of Management and Budget (OMB) for review. Other federal agencies will be permitted to comment on the rule. The Treasury will need to address those comments before publishing a proposed rule in the Federal Register. Publication will trigger a public comment period, which is likely the BTR industry's best opportunity to weigh in before the purchase restriction begins.

What Title X Changes for Institutional Investors

 Title X, Section 1001, of the ROAD to Housing Act, titled "Homes Are for People, Not Corporations," establishes the following framework:

• • Core prohibition. Effective Jan. 7, 2027, a large institutional investor may not purchase, or contract to purchase, directly or indirectly, any single-family home unless the purchase is an “excepted purchase.”
  • Large institutional investor. The term means a for-profit legal entity that invests in, owns, rents, manages or holds single-family homes and, alone or together with other entities, beginning after July 11, 2026, directly or indirectly has investment control of at least 350 single-family homes in the aggregate. Homes acquired through excepted purchases after July 11, 2026, do not count toward the threshold.
  • Single-family home. This is a structure with two or fewer dwelling units intended for occupancy by a single household. Manufactured homes, structures with three or more units, and land are excluded.
  • Broad definition of purchase. The term includes any purchase, transfer or other acquisition, including through mergers, acquisitions, construction, foreclosures or bulk purchases, whether or not cash consideration is paid.
  • Investment control. Excluding debt investments, investment control includes:
    • • • Owning the home or holding primary investment or management authority
        • Controlling the owner, for example, as general partner, managing member, investment manager or adviser
        • Owning or controlling more than 25% of an equity class of the owner, unless the investor is passive
  • Build-to-rent exception. Purchases made under a BTR program, in which the investor purchases, constructs, or constructs and retains newly built single-family homes to be managed as rental properties, are excepted. The exception covers both all-rental communities and mixed owner- and renter-occupied communities.
  • Other excepted purchases. Excepted purchases are not prohibited and do not count toward the 350-home threshold. In addition to BTR, they include:
    • • • For-sale homes: newly constructed, renovated or converted homes held for sale and not rented pending sale
        • Renovate-to-rent: programs that substantially rehabilitate homes that do not meet structural or core-system elements of local building codes, with improvements of at least 15% of the purchase price
        • Homeownership programs: rent and fees no higher than on comparable homes outside the program, a renter contract treated as a consumer credit transaction secured by the dwelling or real property, positive rent reporting, and meaningful financial support, including price concessions, toward the renter's purchase
        • Programs to boost homeownership: positive rent reporting for renters who opt in, a right of first refusal and a 30-day “first look” period, and optional financial support for buying the occupied home or another home
        • Debt satisfaction: repossession under a debt previously contracted in good faith where the investor has the right to repossess
        • Foreclosure and loss mitigation: acquisitions by a mortgage servicer, lender or other entity with a legal right to the home, through foreclosure, deed-in-lieu, enforcement of a security interest or borrower default, for loss mitigation or servicing obligations and not as a long-term investment strategy
        • Investor-to-investor sales: purchases from another large institutional investor that owned the home at enactment or acquired it in compliance with Section 1001, which preserves secondary-market liquidity for compliant BTR communities
        • Transition purchases: purchases from investors not covered by the ban, made no more than two years after the effective date
        • Age 55+ communities: newly constructed, renovated or converted homes for communities of households with at least one member age 55 or older that meet HUD accessibility standards
        • Combinations: any single purchase or combination of the above categories
  • Property outside the ban. Under the act, manufactured homes, structures with three or more units, and land are not considered single-family homes. As a result, BTR communities built as attached townhome blocks of three or more units may fall outside the restrictions entirely. Debt investments do not create investment control, and passive investors are excluded from the 25% equity test.
  • Restructurings. The prohibition also does not apply to purchases made in connection with restructuring or reorganizing the ownership of a single-family home that was owned or purchased before enactment.
  • HUD certification and reporting. Each large institutional investor must confirm its status to HUD within 180 days after enactment, by Jan. 7, 2027, and by Dec. 31 each year thereafter. The notice must state the number of single-family homes it controls and the city and state where each home is located, unless the investor owns 10 or fewer homes in that city.
  • Penalties. Violations carry civil penalties of up to $1 million per violation or three times the purchase price, whichever is greater. Actions will be brought by the Attorney General on behalf of the Treasury.
  • Rulemaking limits and sunset. Treasury may issue notice-and-comment regulations, in consultation with HUD, the Federal Housing Finance Agency and the Securities and Exchange Commission, to minimize market disruptions and mitigate negative impacts on consumers and communities. The regulations may not change the statutory definitions, narrow or expand exception categories in a way that undermines the act’s homeownership goal, add eligible classes of large institutional investors or alter the 350-home threshold. The purchase restriction and related requirements sunset 15 years after Jan. 7, 2027.

New Renter Notice Requirements and Federal Oversight

 Section 1001(c) directs the U.S. Department of Housing and Urban Development (HUD) to establish, by Jan. 7, 2027, a renter outreach resource consisting of a toll-free telephone number and a public website for receiving, tracking, investigating and resolving renter complaints about large institutional investors.

HUD must promptly investigate reported potential violations of federal law, including through formal requests for information to owners. HUD will also share data and coordinate enforcement with other federal and state regulators, direct renters to the appropriate state authorities for local disputes, and report complaint volumes and types to Congress each year.

Under Section 1001(c)(5), large institutional investors must prominently feature the resource on their public websites, give each renter written notice of the resource at move-in and annually after that, and give each renter the name, phone number and email address of the person or entity responsible for receiving and addressing renter disputes. If that contact information changes, the investor must update it within 30 days.

As a result, routine issues such as maintenance delays, security deposit disputes and lease enforcement could escalate into federal inquiries, and annual public reporting creates reputational exposure.

What This Means for BTR Developers and Investors

 The path from enactment to the Jan. 7, 2027, effective date creates several planning considerations:

• • • Map your portfolio against the 350-home threshold. Count the homes over which each entity, affiliate, sponsor and joint venture partner has investment control. Separate excepted homes from non-excepted homes.
    • Calendar the HUD certification. Investors that may be large institutional investors should prepare to confirm their status, home counts and locations to HUD by Jan. 7, 2027, and annually by Dec. 31.
    • Build an exception file now. For each project, identify the applicable excepted-purchase category and keep contemporaneous records supporting it, such as entitlements, permits, construction contracts, certificates of occupancy, renovation budgets, homeownership program documents and business plans.
    • Consider product design. For new projects, evaluate whether a three-or-more-unit attached product, or a combination of exception categories, offers greater flexibility under Title X.
    • Review your pipeline and deal documents. Purchase, forward-purchase, takeout and joint venture agreements that may close on or after Jan. 7, 2027, should address Title X compliance through representations, covenants, closing conditions and allocation of regulatory risk.
    • Evaluate structures and governance. Review control rights, advisory roles and equity stakes above 25% that could create investment control.
    • Prepare to comment. Monitor OMB clearance and Federal Register publication. Coordinate with trade groups and consider submitting comments specific to your operating model.
    • Build compliance infrastructure. Develop notice workflows and a designated dispute contact, set up local resolution procedures, and maintain records that are ready for audit. Treat maintenance requests, rent ledger adjustments, lease renewals and dispute communications as records that may later be reviewed by HUD or summarized in public reporting. Update leases and property management agreements to allocate these duties.
    • Brief capital partners. Lenders, equity partners and buyers will increasingly ask about Title X compliance in diligence and underwriting.

The interplay among the statutory exceptions, Treasury’s forthcoming rule, OMB review and HUD’s new renter outreach regime creates both opportunity and risk for BTR and SFR participants. Please contact Robert B. Gough IV, Kyle N. Mosey, or any member of Phelps' real estate team if you have questions or need guidance.