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Commissioners debate draft ordinance to limit large institutional home purchases; industry and residents weigh in
Summary
A proposed Knox County ordinance would limit purchases by large institutional investors and set market-cap and domicile exemptions; commissioners questioned definitions, exemptions for affordable housing, and legal alignment with federal proposals, while developers urged alignment with vetted federal language.
Commissioner Rawls presented a draft ordinance intended to guard against large institutional buyers acquiring large swaths of single-family homes in Knox County. The proposal would create ownership limits, include a domicile exemption for local owners and a market-cap threshold intended to exclude local companies, and provide other carve-outs such as build-to-rent.
Supporters said the measure aims to preserve starter homes and prevent outside hedge funds from buying neighborhoods and converting owner-occupied housing into long-term rentals. "These companies will go in and buy an entire subdivision and take it off the market for homeownership," one commissioner said, arguing that local starter-home inventory can be lost to institutional investors.
Commissioners pressed for clarity on several technical points: how "affiliate" would be defined to prevent circumvention via LLCs; whether sales under contract or with vested property rights would be exempt; what counts as "affordable housing" at purchase and how long any affordability covenant must remain in effect; and whether a local ordinance would duplicate or conflict with recently passed federal language (federal law caps purchases at 350 homes, while the draft proposes a 100-home local cap). Industry representatives suggested using the federal definitions as a baseline and scaling thresholds for local conditions.
Ben Mullins, representing several clients, and Mac McCourter of the Knoxville Chamber urged continued negotiation on statutory language; Mullins suggested aligning with federal exemptions where possible and scaling thresholds to local needs. Commissioners asked staff and the law department to provide definitional clarifications and to post suggested edits to the public forum for next-week consideration.
Next steps: Commissioner Rawls agreed to accept written suggestions and to post revised language in the commission forum; multiple commissioners asked the law department to help tighten definitions and exemptions ahead of a vote.
