Families priced out; Nevada to tackle corporate home ownership
April Corbin-Girnus
(Nevada Current) Nevada state lawmakers are once again considering tracking and limiting the purchasing power of cash-rich corporate investors, which many believe are inflating the housing market and pricing out middle-class families.
“There are actual families who do want the American Dream,” said Democratic state Sen. Dina Neal during a Senate Judiciary Committee meeting Wednesday. “They want to take their pharmacy job, they want to take their teaching job, and they want to translate that money into a mortgage. They want to own a home, and they’re not actually able to do that in this current market.”
Neal believes the Legislature could help families like that by establishing a corporate landlord registry and restricting the number of single-family housing units that can be purchased by corporate investors. She is proposing both in Senate Bill 391, which passed out of the Senate Judiciary Committee on Wednesday.
SB391 mirrors a 2023 bill Neal sponsored that was vetoed by Republican Gov. Joe Lombardo, with one notable difference: The vetoed bill would have limited corporate purchases to 1,000 units a year. This year’s bill would limit corporate ownership to 100 a year.
To explain that change, Neal recalled that, shortly after the last legislative session ended, the Las Vegas Review Journal reported that corporate investors purchased 264 homes in a single day for $98 million.
“I was like, I really need to drop this number because it’s amazing that someone in one day could buy 265 homes and not bat an eye,” she said.
Neal said she believes the state has the power to temporarily cap corporate investors during a housing crisis.
The Lied Center for Real Estate at the University of Nevada Las Vegas has estimated that investors own roughly 15% of homes in the City of Las Vegas. That percentage is expected to grow both in Nevada and across the country.
The full extent of corporate ownership of single-family homes in Nevada is unknown. Companies often have multiple LLCs with nondescript names. The registry component of SB391 would provide more transparency, said Neal.
State Sen. Ira Hansen, the only Republican to vote for Neal’s bill in 2023, is again supporting the proposal.
“If Senator Ellison and Senator Hansen and Senator Krasner all want to buy the same house, we bid against each other” around market value, he said. “But what if you’re bidding against somebody who can … very comfortably very easily push it to a million dollars and win the bid? That’s what’s happening in these markets.”
Hansen said Neal and the bill are up against “corporations that have literally unlimited resources to hire lobbyists and influence legislators.”
“All the policy people are going to be like ‘we can’t interfere with the free market,’” he said. “This isn’t the free market. This is an artificially manipulated market.”
Closing a tax loophole
Making each rental property its own LLC is often is a way to protect owners from legal liability.
And, for large corporations with thousands of properties, the practice could also be shielding them from paying Nevada’s commerce tax.
Democratic Assemblymember Venicia Considine’s Assembly Bill 457 wants to close that loophole. The bill proposes that if there is a controlling owner whose LLCs combined would meet the state’s threshold for paying the commerce tax, then those LLCs must be aggregated into what’s known as a “combined taxpayer group” that is subject to the tax.
Businesses with gross revenue exceeding $4 million in a taxable year are subject to Nevada’s commerce tax. Only revenue above the $4 million threshold is taxed.
The concept of aggregating business entities that have the same controlling owner for tax purposes exists in other states, including Ohio and Pennsylvania, as well as at the federal level.
AB457 requires approval by two-thirds of both legislative houses because it would potentially raise state revenue. But Considine and Legislative Counsel Bureau staff acknowledged in the bill’s Assembly Revenue Committee hearing Tuesday that they have no estimate of how much it would bring in.
The assemblymember framed the proposal as being driven less by revenue and more by tax fairness..
“As businesses they should be paying the commerce taxes that other businesses that meet the commerce tax are paying,” she said.
It’s a cause Considine has taken up before. In 2023 she sponsored a bill to remove an existing exemption in the state commerce tax for real estate investment trusts, REITs. That bill passed the full Assembly and a Senate committee but was not given a vote by the full Senate.
Considine said that in 2019 three entities, which owned a combined 8,000 homes, were known as the landlords with the highest number of maintenance issues and evictions. She referenced studies that have found a correlation between how far away landlords are and how many units they have and “community-level issues” like maintenance problems.
Hedge funds, private equity firms and other corporate investors are commodifying the housing market, she added. “They are buying in bulk without investing in communities.”
The Assembly Revenue Committee took no action on AB457. The bill is exempt from standard deadlines, meaning lawmakers have additional time to move it through the Legislature.
A third proposal
Democratic state Sen. Edgar Flores introduced a third proposal to limit the purchasing power of corporate investors.
Senate Bill 242 would prohibit investment companies from purchasing residential properties unless they have been listed on the market for at least 30 days.
The bill, which was referred to the Senate Judiciary Committee in late February, has not been given a hearing.