The largest landlords of single-family homes, including Blackstone Group LP, have formed an industry trade group at a time their impact on housing and finance faces scrutiny.

The National Rental Home Council will advocate for professional managers of single-family leased residences, after private-equity firms, hedge funds and real estate investment trusts spent more than $20 billion to buy 200,000 houses, according to a statement by the Washington-based group.

While small investors still own the majority of the 14 million U.S. rental homes, corporate landlords saw an opportunity to start a new real estate asset class after housing prices fell as much as 35% from their 2006 peak and demand for rentals rose after almost 5 million owners lost properties to foreclosure.

“Our members are professionalizing the market,” Gary DeLapp, president of Invitation Homes LP, a Dallas-based unit of Blackstone that owns more than 43,000 rental houses, said in the statement. "The NRHC is an important step for the industry as it begins to engage with interested stakeholders and members of the public to educate them on this growing industry."

One of the council's founding members is Colony American Homes Inc., a landlord with 15,600 homes started by Tom Barrack, which last week began marketing $513.6 million in bonds backed by mortgages on rental houses. It was the second issue of such securities after Invitation Homes sold $479 million in debt last year. Slices of both offerings received the highest rating from Moody’s Investors Service Inc., a sign of Wall Street’s confidence in the industry.

The single-family rental business’s growth and use of financial instruments has drawn criticism from U.S. Rep. Mark Takano, a Democrat from California’s Riverside County, who said large investors have bought thousands of foreclosed properties in his district, outbidding local buyers and helping turn owner-occupied neighborhoods into rental communities.

Takano this month called for the Consumer Financial Protection Bureau, Department of Housing and Urban Development, Securities and Exchange Commission and Treasury Department to report on the possible risks of "the recent increase of investor-owned rental properties and the development of single-family rental-backed securities."

Blackstone has sought to counter impressions that investors are dominating the housing market.

"The reality is that institutional buyers are in a relatively limited number of markets," Jonathan Gray, Blackstone’s global head of real estate, said in an interview earlier this month. "Their buying is tapering and yet home prices continue to go up at a pretty strong clip nationally—even in markets where institutional buyers haven’t purchased a single home."

American Homes 4 Rent, the largest publicly traded single-family landlord with about 25,000 houses, and Starwood Waypoint Residential Trust, a REIT headed by Barry Sternlicht, are the other two founding members of the association, which has retained the Glover Park Group, a Washington-based communications and government-relations firm.

Bloomberg News