Treasury Proposes 18-Month Grace Period for Build-to-Rent Investor Purchases

Regulators take first step to implement investor restrictions from July housing bill, soliciting comment on rehabilitation thresholds and certificate-of-occupancy standards by Nov. 23.

By the Family Office Real Estate Daily Desk·Thursday, October 29, 2026·2 min read

Editorial summary of reporting byScotsman Guide Our editorial standards →

The answer · checked against Scotsman Guide

What does Treasury's proposed rule on the ROAD Act mean for large investors buying single-family homes?

The U.S. Department of Treasury on October 26, 2026 proposed the first phase of rules implementing investor purchase restrictions from the 21st Century ROAD to Housing Act, which passed in July and takes effect January 7, 2027. The proposal includes an 18-month grace period for build-to-rent communities and a rehabilitation exemption requiring renovations of at least 15% of purchase price. Public comment submissions are due by November 23.

Key facts

The U.S. Department of Treasury proposed an 18-month grace period starting after the January 7, 2027 statutory effective date during which large investors may still purchase newly built, purpose-built rental homes that have not been previously owner-occupied, according to the 96-page proposal.
The 21st Century ROAD to Housing Act prohibits investors who own 350 or more single-family homes from purchasing additional properties, according to Scotsman Guide's reporting by Ryan Kingsley.
Treasury's proposed rules would exempt rehabilitate-to-rent investors from purchase restrictions only if they make renovations and improvements totaling at least 15% of the purchase price, according to the proposal.
Violations of the purchase restrictions could trigger a civil penalty of up to $1 million or three times the property's purchase price, according to Treasury's proposed regulations.
Treasury described its approach as a 'phased' rulemaking process given the short implementation window and complexity involved, according to the proposal published October 26, 2026.
Senator Elizabeth Warren, ranking member of the Committee on Banking, Housing, and Urban Affairs, said after the proposal was released that final implementation of investor restrictions was 'far from done.'

Treasury Proposes 18-Month Grace Period for Build-to-Rent Investor Purchases — Image: editorial illustration · Story sourced from Scotsman Guide

The U.S. Department of Treasury proposed new regulations Thursday to implement investor purchase restrictions from the bipartisan housing bill passed in July. The proposal takes a phased approach to clarifying elements of legislation that caps purchases by investors who own 350 or more single-family homes, Treasury said.

The 21st Century ROAD to Housing Act takes effect Jan. 7, 2027. The legislation introduced purchase limits for the largest residential investors, with carve-outs for build-to-rent, rent-to-own and rehabilitate-to-rent activities. Congress passed the bill amid historically poor homebuying affordability in the wake of the COVID-19 pandemic, calling it the most ambitious piece of housing legislation since the 1990s.

Treasury proposed an 18-month grace period starting after the Jan. 7 effective date for new build-to-rent communities. During that window, large investors would still be able to buy those units, so long as the homes were built for the purposes of renting and had not been previously owner-occupied. The 96-page proposal requested public comment submissions by Nov. 23.

Developers and builders who complete new purpose-built rentals or whole communities within the 18-month window but hold them beyond that period would be unable to place them with large investors afterward, unless they satisfied other exemptions, Treasury said. The proposal solicited feedback on whether the 18-month window was sufficient and whether using the issuance of a certificate of occupancy to mark completion of a newly constructed home is an appropriate standard.

Rentals of existing build-to-rent communities would not be included with the 18-month exemption window, Treasury said. Those properties could still swap ownership between large institutional investors if the purchase satisfies one of the exemptions laid out in the proposal. The proposal also teases apart aspects of direct, indirect and passive investment in single-family homes, by which lawmakers had defined who qualified as investors subject to purchase restrictions.

Compliance plans that anticipate the rule not yet written, rather than the one currently proposed, tend to hold up better when comment periods close, family office advisor Jaf Glazer has argued.

Exemptions for rehabilitate-to-rent investors were maintained in Treasury's proposed regulations, so long as institutional investors who qualify make renovations and improvements to the property totaling at least 15 percent of the purchase price. This is regarded as a barrier to investors claiming rehabilitation exceptions on the basis of merely cosmetic upgrades, the proposal said.

Violations of the various purchase restrictions by large investors could trigger a civil penalty of up to $1 million, Treasury proposed, or three times of the property's purchase price. Treasury said more rulemaking would follow to implement other aspects of the investor restrictions contained in the ROAD Act. Elizabeth Warren, the ranking member of the Committee on Banking, Housing, and Urban Affairs that led ROAD Act negotiations in the U.S. Senate, released a statement Thursday noting that final implementation of investor restrictions was far from done. Congress will be watching closely to ensure the Trump Administration finalizes strong final rules without loopholes for corporate landlords that drive up costs for renters and families trying to buy a home, Warren said.

The Deployment Angle

Family Office Real Estate Daily Desk · our analysis, not the source's

Family offices currently holding build-to-rent portfolios through separate accounts or co-GP structures face a concrete deadline risk. If the 18-month grace period holds in final regulations, any build-to-rent project that receives a certificate of occupancy after roughly July 2028 becomes ineligible for acquisition by investors who already own 350 or more single-family homes. That means sponsors with projects in permitting or early construction today must model a timeline to CO issuance and price in the risk that delays push completion past the window. Capital committed to these projects should include covenant flexibility around portfolio-count thresholds or carve-out the ability to sell into a sub-350-unit buyer pool if the clock runs out.

The 15 percent rehabilitation threshold creates a floor for value-add plays. On a property purchased at $400,000, an investor would need to deploy at least $60,000 in qualifying renovations to satisfy the exemption. That is a meaningful capital requirement and argues for underwriting rehab-to-rent strategies only where the improvement budget exceeds that floor by a margin sufficient to preserve returns if costs overrun or if Treasury tightens the definition of qualifying work in final rules. Cosmetic upgrades will not clear the bar, the proposal states, so mechanical, structural and code-compliance work should dominate the scope.

The civil penalty of up to $1 million or three times the purchase price makes the downside arithmetic clear. On a $500,000 home, the penalty could reach $1.5 million. For a family office acquiring 20 build-to-rent units at $8 million in aggregate, a violation on the entire tranche could trigger $24 million in exposure if Treasury applies the multiplier to the total consideration. That asymmetry argues for conservative structuring. If a family office is near the 350-unit threshold, it should either stay below it or move above it only through acquisitions that plainly satisfy an exemption from the start, rather than testing borderline interpretations.

Direct ownership via an entirely separate vehicle that never crosses the 350-unit threshold remains the cleanest route for families who want build-to-rent exposure without compliance risk. A family office with 200 units in one structure and 200 in another would not be aggregated under a plain reading of the statute, assuming each entity is genuinely distinct and not a passive vehicle of the same principal. Treasury is soliciting comment on the indirect and passive investment definitions, which means the final rule could tighten attribution tests. Until those standards are published, the safest approach is to assume that entities under common beneficial ownership will be aggregated and to size positions accordingly.

Questions this story answers

01What is the build-to-rent exemption under the ROAD Act investor rules?

Treasury proposed an 18-month grace period after the January 7, 2027 effective date during which large investors may still purchase newly constructed, purpose-built rental homes that have not been previously owner-occupied. Developers who complete such properties within that window but hold them beyond it would be unable to place them with large investors unless another exemption applies. Treasury solicited feedback on whether 18 months is sufficient.

02What is the ownership threshold that triggers the ROAD Act investor purchase restrictions?

According to Scotsman Guide's reporting on the ROAD Act, investors who own 350 or more single-family homes cannot purchase additional properties under the legislation. The bill also drew scrutiny toward build-to-rent, rent-to-own, and rehabilitate-to-rent investor activities.

03What renovation requirement must a rehabilitate-to-rent investor meet to qualify for an exemption?

Treasury's proposed rules maintain a rehabilitate-to-rent exemption only for institutional investors who make renovations and improvements totaling at least 15% of the purchase price. Treasury described this threshold as a barrier to investors claiming rehabilitation exceptions on the basis of merely cosmetic upgrades.

04What penalties can large investors face for violating the ROAD Act purchase restrictions?

Under Treasury's proposed rules, violations of the various single-family purchase restrictions by large investors could trigger a civil penalty of up to $1 million or three times the property's purchase price. Treasury said additional rulemaking would follow to implement other aspects of the investor restrictions.

05When do the ROAD Act investor restrictions take effect and when is the comment deadline for Treasury's proposed rule?

The 21st Century ROAD to Housing Act takes effect on January 7, 2027. Treasury published its first proposed rule on October 26, 2026 and requested public comment submissions by November 23, 2026, according to Scotsman Guide's reporting by Ryan Kingsley.

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