New legislation aims to ban algorithmic pricing of rents

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The “Preventing the Algorithmic Facilitation of Rental Housing Cartels Act” is expected to be introduced in the U.S. Senate this week.

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A group of United States Senators are set to introduce legislation this week that would make it illegal for landlords to use algorithms to inflate the price of rent or reduce the supply of housing.

The “Preventing the Algorithmic Facilitation of Rental Housing Cartels Act” is expected to be introduced this week by U.S. Senators Ron Wyden (D-Oregon) and Peter Welch (D-Vermont). The senators say the bill is intended to crack down on companies that help landlords raise rents, which they say amounts to collusion and a violation of antitrust laws.

“Setting prices with an algorithm is no different from doing it over cigars and whiskey in a private club,” Wyden said in a statement. “Although it’s my view that these cartels are already violating existing antitrust laws, I want the law to be painfully clear that algorithmic price fixing of rents is a crime. High rents are already squeezing American families in Oregon and across the country — the last thing renters need is housing cartels getting in on the game.”

The press release announcing the legislation specifically names the property management softwares RealPage and Yardi as the chief perpetrators of the alleged cartel, accusing them of helping landlords coordinate their prices to inflate rental rates in the same market.

The companies provide landlords with real-time rent price and lease information and suggest price increases. RealPage has itself boasted of helping clients raise their tenant’s rent by between 5 percent and 12 percent.

“When landlords delegate pricing decisions to algorithms, renters lose out on the benefits of competition and are faced with higher rates, while some homes are priced so high they sit vacant,” said Senator Amy Klobuchar, a cosponsor of the bill. “This bill will ensure rental property owners abide by antitrust law and let market forces determine rents.”

If enacted, the law would make it illegal for property owners to hire any service that coordinates rental pricing services and make illegal the practice of two or more rental property owners coordinating over pricing.

RentPage, in addition to being one of the primary targets of the legislation, is also the plaintiff in two class action lawsuits that accuse it of helping landlords to artificially drive up rents. Other defendants in that lawsuit include Greystar Real Estate Partners, Lincoln Property Co., FPI Management, Mid-America Apartment Communities, Avenue5 Residential, Equity Residential, Essex Property Trust, Thrive Communities Management and Security Properties Inc.

The second class action lawsuit accuses RealPage of being directly responsible for the historically high rent increases that took place in the markets of Miami, Orlando, Jacksonville and Tampa.

Miami saw rent prices increase by 41 percent between March of 2021 and March of 2022. Rent prices have increased substantially since 2020, but price growth slowed to 3.3 percent in 2023.

The legislation and the lawsuits came after an investigative report by the investigative journalism outlet ProPublica, which detailed the inner workings of the property management software YieldStar.

At the time the report was published, RealPage claimed ProPublica’s story “contains inaccuracies and is misleading.”

“Rent prices are determined by various factors including supply and demand as well as each property owner’s unique circumstances,” the company said in a statement in 2022. “There is a housing supply shortage and that alone drives prices higher. Occupancy has been at an all-time high.”

RealPage and Yardi did not respond to requests for comment on the proposed legislation.

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