A new Pennsylvania law will restrict when corporate and institutional investors can buy single-family homes—and most property owners haven't heard about it yet.
Most Pennsylvania real estate owners and property managers don't realize that a significant restriction on residential property purchases is coming in less than three years. Buried in HB2704—a bill primarily about corporate filings and entity regulations—is a provision that will reshape how institutional investors and larger portfolio holders acquire single-family and low-density residential properties.
Under § 7604(a) of HB2704, any person or entity that collectively owns 10 or more single-family or low-density residential properties becomes a "covered entity." Once that threshold is crossed, a covered entity cannot purchase or even submit an offer on such properties until those properties have been publicly listed for at least 90 days.
In plain terms: if you or your company owns a portfolio of rental homes that reaches 10 units, you'll have to wait three months after a property hits the market before you can bid on it. This applies whether you own the properties directly or through affiliated entities.
The rule targets institutional investors, corporate landlords, and portfolio-holding entities. Small mom-and-pop landlords with fewer than 10 properties are unaffected. Individual owner-occupants are not covered entities. But property management companies, real estate investment firms, and larger landlords operating through multiple LLCs or related entities need to pay attention—the law counts affiliates together toward the 10-property threshold.
Violations carry real teeth. Fines can reach $100,000 per violation. Beyond the fine, the law mandates forfeiture of the property itself and any profits derived from it. This isn't a slap on the wrist—it's a financial and operational risk that demands compliance.
The 90-day purchase restriction takes effect January 1, 2028. That gives covered entities roughly two years to understand the rule and adjust acquisition strategies. Other portions of HB2704 take effect on different dates: the registry and Department of State powers (§ 7602) and prohibited owner provisions (§ 7605) have their own effective dates, so the full framework won't activate simultaneously.
If you're a portfolio holder approaching or already above 10 properties, you'll need to rethink acquisition timing and strategy. Properties won't be available for immediate purchase the way they are today. You may need to plan acquisitions further in advance, factor in the 90-day waiting period when modeling returns, or adjust your portfolio growth targets.
For property management companies managing portfolios on behalf of investors, this changes the timeline for deal execution. For smaller operators, it may shift competitive dynamics by slowing down larger institutional players.
The provision is part of a broader policy shift in Pennsylvania toward limiting institutional ownership of single-family housing. Whether you support that goal or not, the law is coming, and January 1, 2028 will arrive quickly.
Source: Pennsylvania HB2704, § 7604(a), Page 10. For a detailed, business-specific summary of how this applies to your property portfolio or management operation, consult with legal counsel familiar with Pennsylvania real estate law.