Fighting for New Yorkers: Governor Hochul Highlights 2025 State of the State Proposal to Disincentivize Private Equity Firms From Cornering the One- and Two-Family Housing Market in New York State

Hedge funds, private equity firms and other institutional investors have played an increasingly significant role in the single-family and two-family housing market in recent years. These large entities can often outbid prospective homeowners with all cash offers and fast track their ownership by waiving inspections, appraisals and other common prerequisites that traditional homebuyers cannot. The rise in digital technologies have further paved the way for these entities to purchase single-family and two-family homes, allowing them to monitor real estate markets and move quickly to identify, evaluate and make offers on properties that fit their criteria.

Nationally, private equity firms own more than 500,000 homes. According to some estimates, private equity firms are expected to own up to 40 percent of the single-family rental market by 2030. When large investors hold a disproportionate share of a local housing market it removes opportunities for homeownership, exacerbating the existing scarcity and driving up prices for remaining homes on the market. These consequences are felt most intensely by first-time and low- or moderate-income homebuyers. This issue is apparent in cities such as Rochester, where it has been reported that hundreds of homes have been purchased by institutional investors. To help level the playing field and increase the opportunities for everyday individuals and families to purchase a home, Governor Hochul is proposing legislation to disincentivize large investment entities from cornering one- and two-family homes en masse, and will require a 75-day waiting period for institutional investors to make an offer on one- or two-family homes. Under the proposal, violators would face stiff penalties of up to $250,000 per illegal offer.

Additionally, the Governor proposed reducing the opportunity for institutional investors to take advantage of tax code provisions that make these investments in single- and two-family homes more lucrative by generally denying these entities the ability to utilize depreciation tax or interest deductions with respect to these properties. Covered investors could only claim interest deductions for homes that support the market by being sold to affordable housing nonprofits or individual homebuyers. If these measures are approved by the state Legislature, New York State would create a nation-leading model that disincentivizes institutional investors from buying up homes.

Buying a home is one of the biggest investments most families make and is one of the top ways for individuals and families to build generational wealth. However, buying a home has become increasingly more difficult because the housing supply is scarce, creating competition and inflating prices. As a part of Governor Hochul’s 2025 State of the State, the Governor also proposed $100 million to build more starter homes and support first time homebuyers with down payment assistance, along with measures that will help create more homeownership opportunities throughout that state. These proposals build on the Governor’s commitment to addressing New York’s housing crisis by ensuring that even more New Yorkers can reach the financial milestone of purchasing a home.