Latest / Burn the Playbook with Michael Starr Hopkins / Wall Street Can't Buy Your Block. Unless It Uses These 3 Doors.

Transcript

Wall Street Can't Buy Your Block. Unless It Uses These 3 Doors. · Burn the Playbook with Michael Starr Hopkins

• 0:00
  A big landlord could keep buying houses under Treasury's proposed exceptions to a new investor ban. A renter who stayed five years could receive no more than five thousand dollars toward buying one, and potentially less.
• 0:12
  It's October twenty-sixth, twenty twenty-six. Congress passed a ban on large institutional investors buying single-family homes. Treasury's draft decides how some of those investors could keep buying anyway.
• 0:24
  The twenty-first Century Road to Housing Act was signed July eleventh. Starting January seventh, twenty twenty-seven, a violation can cost one million dollars or three times the purchase price, whichever is greater.
• 0:36
  Those are substantial penalties. But the draft Treasury published Friday leaves exceptions for building to rent, fixing to rent, and rent-to-own programs.
• 0:45
  This is a proposal, with comments open until November twenty-third. Consider a hypothetical family trying to buy the home it rents.
• 0:52
  Under the proposed rent-to-own exception, the investor could buy the house and provide money toward the renter's eventual purchase.
• 0:58
  After five years, that assistance would be the lesser of five thousand dollars or two and a half percent of the applicable value.
• 1:05
  Treasury uses the price or the Federal Housing Administration's county loan limit, whichever is lower. After seven years, the percentage rises to three and a half percent.
• 1:14
  The five-year formula makes five thousand dollars a ceiling, not a guaranteed minimum. A smaller percentage calculation could produce less. Treasury calls this a path to ownership.
• 1:25
  The landlord gets the house before the renter gets the path. The proposal does give renters rights. They include a right of first refusal, a thirty-day first look, and five business days to match an outside offer.
• 1:37
  Those protections can create an opening to buy. They also leave the renter facing a short deadline to match a price someone else offered. If the renter moves out, the investor's obligation can end ninety days later.
• 1:48
  Treasury's argument deserves a hearing. It says these exceptions would add supply without reducing the availability of single-family homes for families.
• 1:56
  The question is whether the proposed assistance and purchase rights deliver enough ownership opportunity to justify allowing the investor to buy.
• 2:04
  For the hypothetical family, that is a practical question about how to get from paying rent to holding the deed. Five years in a house should offer more than a distant promise and a small contribution toward the price.
• 2:15
  The second exception concerns repairs. An investor could qualify by spending at least fifteen percent on improvements or ten percent on the structure and core systems while fixing every material defect.
• 2:27
  But those percentages do not use the full purchase price. Treasury subtracts the tax-assessed value of the land. A smaller base means a smaller required repair bill.
• 2:36
  Where the land accounts for more of the price, that subtraction does more work. Fixing material defects remains a requirement.
• 2:43
  The argument is about how much additional investment the percentage threshold demands before a large investor gets an exception to the ban. The third exception covers new homes.
• 2:52
  Under Section thirty-six point five, an investor could buy a home nobody had previously owned and lived in. The window runs eighteen months from the certificate of occupancy, provided renters move in first.
• 3:03
  Newly built houses could therefore go directly into a landlord's portfolio. The draft also contains restraints. Treasury refuses a safe harbor for minority investors claiming only protective rights.
• 3:15
  It narrows who qualifies as a passive investor and requires written program policies before purchases. Treasury calls this phase one. Reporting and enforcement rules may follow.
• 3:25
  Housing and Urban Development still has to write the annual notice large investors must file. So the proposal combines real restrictions with substantial exceptions.
• 3:34
  Comments can challenge the purchase assistance formula, the repair calculation, or the reach of the new home exception before the November deadline.
• 3:42
  A family looking for a home deserves to know whether this ban puts a house within reach or gives the better-financed bidder another way around it.
• 3:49
  Subscribe free at burn the playbook dot news for the reporting and next update. [upbeat music]