On Thursday, New York Governor Kathy Hochul enacted legislation prohibiting landlords from utilizing price-fixing software to establish rental rates. This makes New York the first state to implement a ban on algorithmic pricing by landlords, building on similar measures already in place in cities like Jersey City, Philadelphia, San Francisco, and Seattle.
The software in question, developed by companies such as RealPage, aims to assist landlords in setting rental prices by analyzing various data points. It claims to help optimize rent levels to achieve maximum profitability at each property. Governor Hochul highlighted concerns that these “private data algorithms” contribute to significant distortions in the housing market, negatively affecting renters amid a crisis of supply and affordability.
In addition to banning the use of this software for setting rental terms, the law stipulates that property owners using such algorithms could be considered as colluding. This situation arises when two or more landlords use similar software to determine rents, thereby reducing competition among themselves. This aspect of the law aims to address concerns about intentional and unintentional collusion.
A press release from Hochul’s office indicated that the use of such software has resulted in U.S. tenants incurring approximately $3.8 billion in costs for the year 2024. A 2022 investigation by ProPublica found a correlation between RealPage’s pricing algorithms and rising rental prices nationwide. Subsequently, in 2024, the U.S. government filed a lawsuit against RealPage regarding antitrust violations linked to its software.
The new legislation seeks to shield renters from what is termed “algorithmic price collusion.” Supporting this initiative, State Senator Brad Hoylman-Sigal expressed that the law updates existing antitrust legislation to explicitly prohibit rent price-fixing using artificial intelligence. The law is scheduled to take effect in 60 days.
Source: https://www.theverge.com/news/801205/new-york-rent-price-fixing-ban-software