A bill filed earlier this month by Democrats in the North Carolina House would rein in corporate landlords in an effort to curb astronomical home prices in the state’s biggest cities and fastest-growing towns, WRAL reported.
The issues of corporate landlords and skyrocketing home prices are relatively new in North Carolina but have already been the subject of a deep-dive investigation by The Charlotte Observer and The News & Observer in 2022.
According to their investigation, Wall Street investment companies own and control tens of thousands of single-family rental homes across the state and the system in which they are able to acquire and rent those homes out is far more complex than it appears on the surface.
Such a system has now made it even more difficult for North Carolinians to afford to buy a home because the companies that own and rent these homes are “optimized and efficient [and] equipped to squeeze profit out of houses,” the investigation revealed.
House Bill 114 filed by Democrats would limit how many houses large corporations can rent out in some of the state’s fastest-growing counties. It’s not the first time state Democrats have attempted to tackle this issue, this is just the latest effort they are making.
Unfortunately, Republicans, who control both chambers of the legislature, have already dismissed the idea and are making sure the proposal won’t get a vote or a public hearing.
Speaker of the House Tim Moore said the legislation “[D]oesn’t have any [chance]” to pass or even be discussed.
“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.
It’s odd how Republicans think limiting corporations from buying homes and then renting them out at exorbitant prices is “pretty big government” but telling people who they can and can’t marry or what women can do with their own bodies is somehow not?
Instead of addressing the actual problem, Republicans are looking to involve themselves in local building restrictions because home builders say regulations increase the cost of building.
Moore has said he wants to “look at regulations that are not necessary.”
The bill’s nine Democratic sponsors had hoped for an actual discussion or debate on corporate landlords, according to WRAL, but Republicans were not up for having that conversation. The week before HB 114 was filed, Democrats had tried to create a Housing Affordability Committee but were unsuccessful in their effort.
Housing costs – buying and renting – have soared in the last several years. One of the biggest reasons? Corporate landlords snatch up properties as soon as they hit the market and then rent them out at extremely high rates.
According to the monthslong investigation by the two newspapers, as of last April, around 20 companies now own at least 40,000 single-family properties across the state, including at least 25 percent of all rental homes in Mecklenburg County and more than 6,000 single-family homes in Wake County.
“This is a business primed for continued growth, one dependent on gobbling up and building even more single-family homes, traditionally the cornerstone of financial security for most American families,” the authors wrote.
“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 (D-Mecklenburg), 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.”
House Bill 114 would only apply in counties with at least 150,000 residents and would make it illegal for any person or company to buy a single-family home in those counties where they already own and rent out 100 more single-family homes.
Alexander 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.”
The North Carolina Home Builders Association, one of the more influential lobbying groups at the General Assembly, opposed the bill and said they had “grave concerns” about the legislation or any others that “would restrict the opportunity to create more housing supply in North Carolina.”
According to WRAL, the National Conference of State Legislatures (NCSL) said bills that limit investor purchases in the way that HB 114 would are uncommon in the United States. Instead, some homeowners associations put limits on the number of rental properties allowed in their neighborhoods, which can have a similar, albeit lesser, impact on the number of investor-owned properties.
The NCSL told WRAL that some governments have created rental registries in order to track home ownership, while seven states recently introduced similar legislation.