Ro Khanna Goes After Wall Street Landlords to Address Rising Home Prices

As first-time homebuyers across the country face higher-than-ever costs, California Rep. Ro Khanna is going after one of the biggest winners of the housing crunch: Wall Street landlords.

On Tuesday, Khanna reintroduced the Stop Wall Street Landlords Act, a bill that seeks to deter large institutional investors from scooping up single-family homes.

“Housing is one of the biggest issues I’ve heard in my district,” Khanna told NOTUS. “This is front and center on voters’ minds. It’s something that we should have a bipartisan consensus on.”

In the first half of 2024, one in four “low-priced” homes were purchased by investors, according to the realty company Redfin. In that same time, the percentage of Americans with a “high degree of concern” about housing costs rose to 69%, per data collected by the Pew Research Center.

If passed, Khanna’s bill would increase taxes on future home acquisitions made by companies and private equity funds that hold over $100 million in assets and bar government-supported lenders from backing new mortgages for such purchases.

Khanna argued that preventing large institutional investors from treating housing as a speculative asset would ease an affordability crisis where demand for housing has far outstripped supply.

“It is one of the key things that we can do to quickly provide relief, particularly in certain markets, like in Phoenix, like in Las Vegas, where there’s been huge evidence of private equity buying up homes,” Khanna said.

The proposed reforms also would eliminate some tax breaks for companies and private equity funds that hold over $100 million in assets while making exceptions for so-called “mom-and-pop” landlords.

Additionally, government-sponsored lenders like the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation would be barred from backing mortgages for major investors. The bill would give large investors 18 months to sell off existing single-family residences, after which they would face a 100% federal tax on any such sale.

“It makes no sense for the federal government to continue to subsidize Wall Street to buy up single-family homes,” Khanna said. “We have too little supply and a lot of demand. That has made rents high and housing out of reach for many middle-class and working-class Americans.”

A number of housing groups have already endorsed Khanna’s proposal, including the California Democratic Renters Council, Private Equity Stakeholder Project and the National Coalition for the Homeless.

This isn’t the first time Khanna has introduced similar legislation. He initially offered the bill just before the 2022 midterm elections. But Republicans won the House weeks later, dooming its chances of passage.

Still, Khanna said his proposed reforms have gained traction since introducing them two years ago.

“This is a bill to shift policy in an economically more sane direction,” Khanna said. “Now that more and more people are hearing about it, the policy is being embraced, and it’s one that I hope will pass, regardless of who’s president.”

On the campaign trail, Kamala Harris has taken aim at investor housing purchases, calling for major investors who purchase “large numbers” of single-family homes to lose tax breaks. Harris has also proposed tax incentives for builders and getting rid of “needless bureaucracy” to meet her goal of building 3 million homes in her first term.

“Community after community feels taken advantage of by Wall Street investors and corporate landlords who have bought thousands of single-family homes,” Harris’ economic playbook reads.

Sen. JD Vance has similarly excoriated Wall Street landlords, pointing out in an interview last year that the large businesses buying up homes have access to lower interest rates and “completely crowd out the availability for homes for people who want to just buy a piece of their community.”

“When these hedge funds take special government privileges and go and buy up all the single-family homes, what they’re doing is destroying wealth in this country,” Vance said as a candidate in July 2021.

Khanna said that while the rhetoric from Republicans such as Vance is “fine,” that talk has yet to translate into legislative action from the GOP.

“Well, why can’t they endorse the bill then?” he asked. “Criticizing it rhetorically is different than supporting the policy that’s going to fix it.”