Rep. Smith Introduces the Saving Homes from Acquisition by Private Equity Act to Combat Nationwide Housing Crisis
July 28, 2022
WASHINGTON, D.C. – Representative Adam Smith (D-Wash.) today issued the following statement after introducing the Saving Homes from Acquisition by Private Equity (SHAPE) Act, which would create a significant federal real estate transfer tax on institutional investors and private equity firms who purchase single-family homes on the open market. The revenue from this tax would go directly towards grants that will help states build and preserve affordable housing and slow the consolidation of single-family home ownership among the investor class.
“One of the greatest challenges we face as a country is housing affordability. Individuals and families across the country are struggling to afford to rent or buy homes. This has been exacerbated in recent years by a troubling increase in investors purchasing a significant percentage of existing single-family homes, squeezing out prospective homebuyers and harming future renters. We must curb this harmful trend before it further accelerates our nation’s housing crisis – that’s exactly what the SHAPE Act will do. Folks in our communities should not have to compete with large institutional investors and private equity firms when they go to buy a home, and renters should not be subjected to the harmful practices by these investor class landlords that want to wring the value out of each house. My bill will deter this problematic trend that is damaging the housing market, consumers, and our communities.”
See below for statements of support for the Saving Homes from Acquisition by Private Equity (SHAPE) Act.
“The movement of private equity into housing markets has been disastrous, increasing the financial burden on renters who have to choose between paying rent and basic necessities like food and healthcare. This burden has fallen particularly hard on Black and brown tenants, whose neighborhoods have been targeted by corporate landlords. We are thrilled to see Representative Smith address this issue with the Saving Homes from Acquisition by Private Equity Act, which would discourage firms from buying up single family homes while requiring those that do so to contribute an equal investment to building affordable housing through the Housing Trust Fund.” - Katie Goldstein, Director of Housing Campaigns, CPD Action
“For the last decade, private equity firms have scooped up starter homes at alarming rates, benefiting absentee landlords and depleting first-time homebuying opportunities for middle-income households. We need legislation like this to preserve wealth-building homeownership opportunities for people who live in and contribute to the economic prosperity of our communities.” - Kathleen Hosfeld, Executive Director, Homestead Community Land Trust
“Private equity firms and other corporate landlords have contributed to the housing crisis by crowding out families from buying homes on the open market and raising rents on tenants to the point of unaffordability. This legislation would go a long way in discouraging the hoarding of single-family homes by corporate investors and give American families a fighting chance at realizing the American Dream of owning a home and securing an affordable place to live.” - Chris Noble, Esq., Policy Coordinator, Private Equity Stakeholder Project
"Prosperity Now applauds Rep. Smith for his leadership in introducing the Saving Homes from Acquisition by Private Equity (SHAPE) Act, which would reasonably regulate the role of private equity in the housing market, shore up the Housing Trust Fund, and begin to level the playing field for home buyers. Private equity has aggravated the country’s housing crisis and is benefiting from the nation’s underproduction of new homes. Congressman Smith’s bill will help address this distortion of the market." - Doug Ryan, Vice President, Policy & Applied Research, Prosperity Now
“America is facing one of its toughest housing affordability crises in history. The Saving Homes from Acquisition by Private Equity Act (SHAPE) would help communities preserve affordable housing and would grow the Housing Trust Fund to ensure the lowest-income families have access to safe, secure housing. NAHRO thanks Congressman Smith for his continued dedication to increasing affordable housing supply.” - Mark Thiele, C.E.O., National Association of Housing and Redevelopment Officials (NAHRO)
The purchasing of single-family homes by large investors, especially in the current housing market, serves only to make profits for the investors and provides no value to the communities where these homes are located. People should not have to compete with wealthy private equity and investor firms when they are trying to buy a home in their community. A significant tax on these purchases will help enable more families the opportunity to purchase a home, combat the growing large investor landlord model, and provide additional funding to build and preserve affordable housing for low-income households.
The Saving Homes from Acquisition by Private Equity Act:
- Creates a federal real estate transfer tax, set at 100% of the property's sale price, charged to large private equity firms or corporations with $20 million in assets purchasing any single-family home(s).
- Directs all revenue from the tax into HUD’s Housing Trust Fund, which provides grants to states to produce and preserve affordable housing for extremely low- and very low-income households.
- Allows exemptions from the tax for non-profits and government entities, or if the purchase is pursuant to a government program providing housing to low-income individuals.
The Saving Homes from Acquisition by Private Equity (SHAPE) Act is endorsed by several organizations, including Private Equity Stakeholder Project, Prosperity Now, the National Association of Consumer Advocates, CPD Action, and the Washington Low-Income Housing Alliance.
A fact sheet of the bill can be found here.
The full text of the bill can be found here.