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FTC Launches Probe into Mega Single-Family Rental Investors

The Federal Trade Commission seeks public comment on “potential 6(b) orders that would inform an FTC study of mega single-family rental investors.” These would be companies that own at least 1,000 single-family homes and rent the properties to consumers.

Section 6(b) of the FTC Act gives the agency the power to require entities to answer questions and provide data about their “organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals.” Such studies do not need a “specific law enforcement purpose.”

The FTC has used such requests when considering actions on what it perceived as anticompetitive activity.

“As Americans face a housing shortage and pay soaring rents, it’s vital to understand the role played by large institutional investors,” said FTC Chair Lina M. Khan in prepared remarks. “This proposed study would shed much-needed light on the mega-investors that have amassed huge portfolios of single-family rental units and potentially contributed to the housing challenges that Americans face.”

“The compulsory process orders will seek information from those firms concerning their corporate structure, current and historical housing inventory information, as well as strategic business plans and other investor information regarding growth plans, competition, prices, and expenses,” the FTC wrote. They said that Invitation Homes, Starwood Property Trust, Colony American Homes, Waypoint Residential Trust, and American Homes 4 Rent consolidated into two companies — Invitation Homes and American Homes 4 Rent.

Currently, Wall Street investors have signaled that the properties of the two companies are overvalued, as shares in the company are trading at a 20% to 35% discount respective to net asset values.

However, this entire action began less than a week before Donald Trump took the oath of office, and his administration took control.

Kahn told the FTC staff in a memo that she would resign from the agency within the next few weeks, Reuters reported. The agency’s chair is now Republican Commissioner Andrew Ferguson. Kahn has said that she plans to complete the required document management retention and records management tasks in her remaining days.

Ferguson, joined by Republican Commissioner Melissa Holyoak, wrote a letter in response to the 6(b) notice, noting that while the FTC “ has an obligation to Congress and the American people to determine whether rising housing prices are the result of weak competition in relevant housing markets,” the action isn’t happening “in the abstract.”

Since Trump’s election, “I have vigorously objected to the Commission doing anything other than routine law enforcement, and have dissented over and over from new rules, regulations, guidance, and novel law-enforcement theories.”

However, the process will be under the control of the Trump administration, and neither of the two Republicans are objecting to the current stage because an analysis of the single-family rental companies is “worthy of study.”

Last week, the FTC took legal action against Greystar Real Estate Partners over alleged hidden rental fees. Greystar says that it has been actively improving transparency but that regulatory guidelines in the area are unclear. Also unclear is what the Trump administration will choose to do with this case.

Reprinted with permission from the Wednesday, 22 January 2025 07:06:36 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.