Senate Democrats Propose Bill Targeting Private Equity Home Ownership

Senate Democrats, led by Senators Elizabeth Warren of Massachusetts and Jeff Merkley of Oregon, have introduced new legislation aiming to curb private equity control over the housing market. The "American Homeownership Act", as the proposal is called, seeks to address a growing housing crisis in the United States, where an estimated shortage of more than 7 million affordable homes persists.

The bill proposes to eliminate federal tax deductions and other housing benefits currently available to corporate investors and private equity firms that have amassed tens of thousands of single-family homes. According to the lawmakers, this practice is reducing homeownership opportunities for first-time and middle-income buyers while driving up housing costs.

Redirecting Savings to Affordable Housing

Under the proposed legislation, any savings generated from the removal of these tax breaks would be funneled into efforts to expand the nation's affordable housing supply. Additionally, the bill includes measures to empower antitrust enforcers to address the large-scale corporate acquisitions of residential properties that Democrats argue are pushing families out of the market.

"Today Democrats are introducing legislation to stop Wall Street from snapping up homes in bulk and jacking up rent for families", said Senator Warren, who serves as the ranking member of the Senate Banking Committee. "This bill will take on predatory landlords while making investments to increase housing supply and boost homeownership for Americans."

Senator Merkley echoed these concerns, calling private equity firms a significant contributing factor to rising housing costs. "Hedge funds are driving up home prices and rents across America as they gobble up single-family homes", said Merkley, the ranking member of the Senate Budget Committee. "They are a significant factor in killing the dream of homeownership and must be stopped."

Calls for Bipartisan Action

Interestingly, Democrats pointed to support from former President Donald Trump, who has also taken steps to address institutional investors’ impact on the housing market. Last month, Trump signed an executive order that directs federal agencies to issue guidance preventing certain federal programs from approving or insuring the sale of single-family homes to large institutional investors. The order also tasked the Treasury Department with reviewing rules related to institutional purchases of single-family homes.

Merkley emphasized his willingness to collaborate on the issue, stating, "Even President Trump has acknowledged the problem. I’ll work with anyone, on either side of the aisle, who is serious about driving down home prices and rents."

Addressing a Growing Housing Crisis

The proposed legislation is an effort to counter what Democrats describe as "predatory" actions by private equity firms in the housing market. By reducing corporate participation in residential property acquisitions and reinvesting in affordable housing, the bill aims to alleviate the challenges faced by prospective homeowners nationwide.

Whether the "American Homeownership Act" will gain bipartisan support remains to be seen, but its introduction highlights growing concerns over the intersection of corporate influence and housing affordability in the United States. Senators Warren and Merkley hope their proposal will spark meaningful change in an increasingly competitive housing market.

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