Opportunities for Improvement in the Senate’s Housing Act

The Senate’s 21st Century Road to Housing Act, a compendium of smaller housing acts, contains much that could help working Americans. Most notably, it contains provisions that would make receiving permits easier, update rules for building modular and manufactured houses, and reduce duplicative government reviews.

The bill has its weaknesses, though—primarily a tendency to lapse into the familiar Washington instinct to subsidize, centralize, and create new bureaucracy.

Lawmakers should review the 302-page bill very closely and consider making some crucial changes. By doing so, Congress could preserve the deregulatory core of the bill while amending or cutting the sections that expand federal bureaucracy, create new subsidy channels, and delegate major policy decisions to agencies after the fact. 

Here is a list of several aspects of the bill that demand particular attention.

1. Whole-Home Repair Act

Giving forgivable grants and loans to low- and moderate-income landlords and homeowners for routine repairs is simply shifting the cost of repairs to taxpayers. This act risks creating a permanent dependence on federal subsidies for routine repairs.

2. Innovation Fund for Housing and Urban Development Section

A new $200 million-per-year competitive Department of Housing and Urban Development grant is created to reward certain jurisdictions with broad flexibility over how the money is used. While this provision may sound pro-housing, it could subject HUD to lobbying, political favoritism, and mission creep. 

3. Revitalizing Empty Structures Into Desirable Environments Act 

While reusing previous structures is indeed desirable, having Washington subsidize it is generally not. If these conversions make economic sense, the market will usually undertake them already without subsidy, absent onerous local permitting. 

4. PRICE Act 

The PRICE Act provides grants to manufactured home communities. While manufactured housing is part of the affordability solution, the Housing Supply Expansion Act and the Modular Housing Production Act, already in the bill, help bring manufactured houses into the 21st century without using taxpayer dollars. 

5. Creating Incentives for Small Dollar Loan Originators and Small Dollar Mortgage Points and Fees Sections

For these two sections, Congress is right to investigate why small-dollar mortgages under $100,000 face disproportionate compliance costs, as well as why lenders charge certain fees on qualified mortgages. However, these sections give the Consumer Financial Protection Bureau and the Federal Housing Finance Agency significant latitude. By pairing these fact-finding missions with open-ended rulemaking authority, these sections seemingly delegate significant rulemaking without substantial congressional review.

6. Reforming Disaster Recovery Act 

While disaster recovery is critical, this act creates a new Office of Disaster Management and Resiliency at HUD using a standing block-grant that may duplicate functions already performed by the Federal Emergency Management Agency. The other concern is that the mission for such an office is likely to drift from true disaster response into broader and—unfortunately—more subjective “resiliency” spending. 

7. HOME Investment Partnerships Reauthorization and Improvement Act 

This act reauthorizes and expands a major HUD grant program while increasing administrative flexibility in ways that may entrench federal housing bureaucracy. To be fair, there are three useful ideas tucked inside it: a small-scale housing category for projects of four units or fewer, a 24-month Community Housing Development Organization recapture rule, and streamlined inspections. However, these narrower reforms do not necessarily justify the broader expansion. Additionally, projects funded by HOME and the Low-Income Housing Tax Credit tend to be much more expensive than equivalent market-rate projects, and there is limited evidence that supply-side subsidies like the HOME program are cost-effective in increasing housing supply.

8. Rural Housing Service Reform Act 

This act extends the Department of Agriculture rural rental assistance from maturing mortgages, effectively transforming a time-limited support into a more open-ended subsidy. However, these programs were designed to mature out for a reason. If Congress overrides that structure, it increases moral hazard and permanent dependency. 

9. Housing Unhoused Disabled Veterans Act 

While no one wants to see disabled veterans unhoused, this provision excludes only VA disability compensation from certain housing eligibility criteria. However, other Americans with disability income, such as Social Security Disability Insurance or Supplemental Security Income, would generally still have that income included in their eligibility criteria. If Congress believes disability benefits should not reduce housing assistance, it should apply that principle consistently or not at all. 

10. Helping More Families Save Act 

Despite the act’s name, the provision only allows up to 5,000 select Section 8 or 9 households to escrow rent increases tied to higher income, shields those increases from other HUD benefit calculations, and allows withdrawals generally after five to seven years. In practice, this program could function like a rent freeze paired with a later cash payout, weakening the incentive to permanently transition off assistance. Worryingly, it may even allow participants to exit briefly, cash out, and later reenter housing assistance. More precise time limits and work requirements could ameliorate this. 

11. Homes Are for People, Not Corporations Section

This is perhaps the most well-known section, as it restricts large institutional investors from owning large amounts of housing. While the stipulated 350-home threshold is oddly high, its excepted-purchase language also creates a two-year loophole which could allow for inventory reshuffling. This could allow these large institutional investors to cut deals with smaller investors below this cap to keep a significant share of a local market. Other solutions, like placing a 30- to 60-day moratorium on large investor bids, would be prudent to consider.

12. Central Bank Digital Currency Section

A section was added to the bill that prevents the government from making a central bank digital currency but sunsets after four years, though it ostensibly allows regular banks to do so. While this issue is certainly worthy of congressional discussion, the inclusion of central bank digital currencies should be reviewed. 

While this list focuses on the weaknesses of the Senate’s 21st Century Road to Housing Act, there are still several great inclusions. Notably, the BUILD Housing Act, Streamlining Rural Housing Act, and various congressional reporting sections necessary for transparency and accountability are included. But those gains will be diluted if Congress leaves in the sections that create new grant pipelines, enlarge HUD’s bureaucracy, and delegate too much policymaking to agencies.

The House can strengthen the bill by preserving the deregulatory core and cutting these expansive sections unlikely to ameliorate the most germane supply side issues.

The post Opportunities for Improvement in the Senate’s Housing Act appeared first on The Daily Signal.