Democrats' bill to ban big investors from the housing market is 'destructive,' Kevin O'Leary says

• Democrats want to ban big investors from buying houses to improve home affordability in the US.
• Kevin O'Leary said the bill is "destructive" and the policy will harm free markets.

Democrats want to ban large investors from buying homes across the US in an attempt to improve housing affordability, but Shark Tank star and investor Kevin O'Leary says that government meddling in the market is a bad idea.

O'leary notes that hedge funds, private equity, and family offices, are all sources of capital to various parts of the economy. When the government wants to manipulate where capital comes from or intervenes in markets, it presents a "very bad idea" and "very bad policy," O'Leary said in an interview with Fox Business Monday.

The New York Times reported this week that in the Senate, the End Hedge Fund Control of American Homes Act of 2023 would force institutional buyers to sell off all the single-family homes they currently own over the next decade.

It would eventually ban those buyers outright from owning or buying single-family properties.

"The housing in our neighborhoods should be homes for people, not profit centers for Wall Street," one of the. bill's authors, Senator Jeff Merkley, D-Ore., wrote in a press release. "Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices. It's time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford."

In the House, meanwhile, Democrats put forth a bill that would charge investors who own more than 75 homes a yearly fee of $10,000 per property.

To O'Leary, the chairman of O'Leary Ventures and a star on Shark Tank, the proposal resembles government overreach in free markets.

"To actually decide, well I'm going to pick this source of funding over this one, is not what the government should be doing," he said.

As of June 2023, 26% of all single-family home purchases were made by investors, according to CoreLogic data. That hovered below 20% before the pandemic, but institutions only accounted for a small percentage of those purchases, with the bulk being taken up by small mom-and-pop landlords.

"I don't care if you're Democrats or Republicans or whoever you are, stay out of markets," O'Leary maintained. "Let the markets be the markets. That's what is so efficient of our economy. When you let it do its thing, it's the lowest cost of capital with the most liquidity. This kind of government policy is very, very bad and destructive."