On Thursday, Novel York Governor Kathy Hochul signed the bill into law legislation banning the use of price fixing software by owners setting rent rates. Novel York is the first state to ban algorithmic pricing by property owners, following a string of citywide bans in Jersey City, Philadelphia, San Francisco and Seattle.
Software companies like RealPage offer landlords algorithms that can set rental prices. The software can also lend a hand determine the ideal number of people living in a property or the terms for extending a lease. The real site says can lend a hand its clients “optimize rents to achieve overall top yield or rent and occupancy mix for each property.” Hochul, however, argues that the “private data algorithms” touted by these software companies are creating “distortions in the housing market” that are harming renters “at a historic time of crisis in housing supply and affordability.”
Not only does the law prohibit setting terms on the lease of software, but it also states that property owners using the software will be considered collusive. In other words, two or more rental property owners or managers who set rents using an algorithm are effectively choosing not to compete with each other, whether they do so “knowingly or through reckless disregard,” the law says. This is a separate violation from normal employ of the software itself.
According to Hochul’s press release, using this software will cost U.S. renters approximately $3.8 billion in 2024. 2022 investigation according to ProPublica linked the RealPage algorithm to skyrocketing rental prices across the country. Two years later, the US government sued RealPage.
The bill protects renters from “algorithmic price fixing,” said Pat Garofalo, director of state and local policy at the American Economic Liberties Project. press release. One of the bill’s sponsors, state Sen. Brad Hoylman-Sigal, said of the bill: “This legislation will update our antitrust laws to clarify that artificial intelligence-enabled rent pricing is unlawful and ensure there are limits to conduct that the federal government has identified as leading to anti-competitive practices and price fixing.”
The act will enter into force in 60 days.