Senator Hagerty Introduces ‘Freedom to Build Act’ to Combat Regulatory Housing Costs

WASHINGTON – U.S. Senator Bill Hagerty, R-Tenn., has introduced new legislation aimed at reducing the significant regulatory costs associated with building new homes, which a recent presidential economic report estimates add more than $100,000 to the price of a new single-family residence. The proposed legislation, titled the “Freedom to Build Act,” seeks to streamline what proponents call a burdensome web of fees, mandates, and red tape that has stifled housing supply and pushed homeownership out of reach for many American families. The bill’s introduction follows a recent Economic Report of the President that identified these bureaucratic hurdles as a primary driver of soaring home prices over the past decade. While federal legislation targeting local regulations is a complex undertaking, the underlying issue is one we see constantly with our business clients in the construction and real estate development sectors. This “bureaucrat tax” isn't just a line item on a budget; it represents a cascade of delays, consultant fees, and compliance costs that can derail a project entirely, especially for small and mid-sized firms that lack the capital reserves of larger competitors. These administrative burdens create significant uncertainty in financial modeling and can make otherwise viable housing projects unprofitable, directly contributing to supply shortages in growing communities. This is precisely the type of operational friction we address through our business process reengineering services. Our experience shows that a proactive strategy is essential for navigating this environment. We help clients map out the full lifecycle of regulatory touchpoints, from initial zoning applications to final inspections, to build more accurate timelines and budgets. By identifying potential bottlenecks and redundant requirements early, businesses can mitigate risk and improve capital efficiency. For companies feeling the squeeze from these non-market costs, understanding how to reengineer their processes is critical. Business owners can explore strategies to counter these challenges by contacting C&S Finance Group LLC at csfinancegroup.com. According to the Economic Report of the President, the cumulative effect of these regulations constitutes between 24% and 29% of the total cost of a new home. The report argues that during the period of low interest rates from 2012 to 2021, strong housing demand collided with a constrained supply, largely due to these bureaucratic costs and delays. “Reform at the state and local levels to tackle the sources of the six-figure bureaucrat tax would greatly enhance the ability of supply to keep up with stronger demand,” the report stated. In a statement, Senator Hagerty echoed these concerns. “For many Americans, the dream of owning a home is increasingly out of reach, and excessive regulations have made new homes too costly for many American families,” he said. “My Freedom to Build Act streamlines costly and often redundant regulations to reduce the cost of a new home in our country.” The legislation specifically targets what the presidential report called “California-style fees, mandates, regulations, and red tape.” A prominent example of such a measure is Los Angeles’s Measure ULA, often referred to as a “mansion tax.” Enacted in April 2023, the measure imposes a 4% tax on all property sales valued over $5 million and a 5.5% tax on sales over $10 million, with revenues intended for affordable housing initiatives. However, a recent study by researchers at the UCLA Lewis Center for Regional Policy Studies and the USC Price School of Public Policy found the tax has had significant unintended consequences. The analysis of over 338,000 property sales revealed that the measure has sharply reduced the number of transactions for properties needed for housing development. Researchers found that after the tax took effect, the probability of a property transaction exceeding the $5 million threshold fell by nearly half in Los Angeles compared to surrounding cities not subject to the tax. The study also noted that the tax disproportionately affects the sale of apartment buildings, commercial properties, and industrial sites—the very properties often acquired for redevelopment into new housing—rather than just single-family mansions. This has led to property owners either pricing their assets just below the tax threshold or choosing not to sell at all, further constricting the supply of land available for new construction. The introduction of the Freedom to Build Act comes as Congress shows broader interest in addressing the nation's housing affordability crisis. Last month, the Senate passed the 21st Century ROAD to Housing Act, a separate, bipartisan package aimed at assisting first-time homebuyers and lower-income Americans. The successful passage of that bill suggests a potential willingness across the aisle to engage on housing policy, though the specific approach of targeting local and state regulations in Hagerty's bill may face different political hurdles. The bill will now be referred to the appropriate Senate committee for review. Its path forward will be closely watched by homebuilders, real estate investors, and small businesses in the construction industry, who would be directly impacted by any changes to the regulatory landscape. The central debate will likely revolve around the balance between federal oversight and local control in land use and development policy.