New York Governor Kathy Hochul has signed legislation prohibiting landlords from using price-fixing software to establish rental rates. The law, a first for any U.S. state, is designed to counter algorithmic pricing amid a statewide housing crisis.
The ban follows similar municipal-level ordinances in cities including Jersey City, Philadelphia, San Francisco, and Seattle. Software from companies like RealPage provides landlords with algorithms to set rental prices, determine ideal occupancy levels, and formulate lease renewal terms. RealPage advertises that its product helps clients “optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property.” Governor Hochul stated that these “private data algorithms” create “housing market distortion,” which negatively affects renters during what she described as a “historic housing supply and affordability crisis.”
The new legislation not only outlaws the practice of setting rental terms with such software but also legally defines its use by multiple landlords as a form of collusion. The law stipulates that if two or more rental property owners or managers utilize an algorithm to set rents, they are, in effect, choosing not to compete with one another. This applies whether the action is taken “knowingly or with reckless disregard.” This creation of a collusive agreement is considered a distinct violation separate from the act of simply using the software itself.
According to a press release from Governor Hochul’s office, the application of such software has resulted in an estimated cost to U.S. tenants of approximately $3.8 billion in 2024. The issue gained prominence following a 2022 ProPublica investigation that established a link between RealPage’s algorithm and rapidly increasing rental prices across the United States. Two years after that report, the U.S. government initiated a lawsuit against RealPage.
Supporters of the bill emphasized its role in protecting consumers. Pat Garofalo, the director of state and local policy at the American Economic Liberties Project, said in a press release that the legislation shields renters from “algorithmic price collusion.” State Senator Brad Hoylman-Sigal, one of the bill’s sponsors, commented on its purpose. “This legislation will update our antitrust laws to make clear that rent price-fixing via artificial intelligence is against the law and ensure there are boundaries against behaviors that the federal government has found lead to anticompetitive practices and price fixing,” he said.
The law is scheduled to go into effect 60 days after its passage.
