A group of legislative Democrats want to temper rising rent and home prices in North Carolina’s fastest growing counties by limiting how many houses large companies can rent out.
It’s the latest effort to address housing affordability in the fast-growing state, but one that won’t go far in a legislature controlled by Republicans. The GOP wants to address the problem by stoking supply through looser building regulations.
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Republican House leaders dismissed the Democrats’ idea out of hand, relegating their proposal to a legislative holding pattern that means it won’t get a vote, or a public hearing. “It doesn’t have any [chance],” Speaker of the House Tim Moore, R-Cleveland, said this week.
“To say that someone is limited in how much land they could own, that’s pretty big government, and we’re not going to go there,” he said.
The legislature’s Republican majority is more likely to tinker with local building regulations, which home builders say increases the cost of construction. This is an almost annual back-and-forth at the legislature, with the building industry jousting with city and county governments over zoning rules, building regulations and inspection timetables, but Republican leaders in both the House and Senate have indicated they expect changes this year.
Moore said he wants to “look at regulations that are not necessary.”
House Bill 114’s nine Democratic sponsors had hoped for more robust discussion on corporate landlords. House Democrats also led a failed effort last week to create a Housing Affordability Committee.
Rental rates and home prices soared over the last few years in the state’s growing cities, pricing some peopleout of the market. One of the contributors: Corporate landlords, who have snapped up properties to build large rental portfolios in growing areas across the country.
Over the past decade large companies have boosted their purchases of single-family homes, beating traditional buyers out on price and renting out the homes. The Charlotte Observer and The News & Observer studied the issue for months last year, combing through property sale records. The newspapers reported that, as of mid-April, institutional investors had bought at least 40,000 homes in the state over the last decade and rented them out.
In Charlotte, the newspapers reported, these companies owned a quarter of all rental homes.
“Clearly we have a problem in this state where single family homes are getting to be unaffordable for a lot of our citizens,” said state Rep. Kelly Alexander, the lead sponsor on House Bill 114. “And one of the things that distorts the market is the ability of large capital to come in and buy up neighborhoods.”
The bill would only apply in counties with at least 150,000 people. It would make it illegal for any person or company to buy a single family home in an urban county where they already own and rent out 100 or more single family homes.
Alexander, D-Mecklenburg, said he hopes to “limit the amount of distortion that can take place.” The bill says that the legislature doesn’t want to “inhibit the ownership of property” but that corporate purchases are cutting into the housing supply and pricing people out of home ownership, “one of the most reliable ways to build wealth.”
Alexander’s bill, filed this week, was initially referred to the House Commerce Committee — a good sign the measure had enough life to at least get a committee hearing. But the bill almost immediately got pulled from that committee and stashed in the House Rules Committee, which is often a graveyard for doomed legislation.
The North Carolina Home Builders Association, an influential lobbying group at the statehouse, opposed the bill, saying it had “grave concerns” about any legislation that “would restrict the opportunity to create more housing supply in North Carolina.”
“Our hope is to focus on the regulatory burdens that are imposed, especially at the local level, that make it impossible to build a variety of housing options for everyone,” Home Builders Association Executive Vice President Tim Minton said in an email.
Moore said he understands Alexander’s concerns, “but the day that we start saying that companies here or citizens … are limited to how much property they can own — that would be a dangerous day.” The speaker said he does, however, favor federal proposals to limit how much farmland China and Chinese companies can buy in the United States.
The speaker answered reporters’ questions about the bill on the House floor this week after a legislative session. Alexander stood nearby listening, and afterwards had a conversation with Moore. The talk didn’t change anyone’s mind, but Moore offered Alexander a seat on a House committee that looks at land use issues in the state.
Bills limiting investor purchases like this are not common in the United States, according to the National Conference of State Legislatures. Some homeowners associations, though, have capped the number of rentals allowed in their neighborhoods, which can cut down on investor-owned properties, the association said.
The group also said some governments have created rental registries to track ownership, and that seven states recently introduced that sort of legislation.
The association has pointed its members to a 2022 report that indicates investors purchased “a record number of single-family homes since 2019,” with a focus on low-priced homes.
“Large investment firms are much less sensitive to increased interest rates, and it can be difficult for families with low- or moderate-incomes to compete with firms offering above asking price and often with cash,” the association said in a memo released this month on the topic.