On Thursday, New York Gov. Kathy Hochul signed into regulation legislation banning the use of price-fixing software by landlords to set rental charges. New York is the primary state to outlaw algorithmic pricing by landlords, following quite a few city-wide bans in Jersey Metropolis, Philadelphia, San Francisco, and Seattle.
Software program corporations such as RealPage supply landlords algorithms that may set rental costs. The software program may assist decide the best variety of folks to reside in a unit or the phrases of a lease renewal. RealPage says it could assist its shoppers “optimize rents to realize the general highest yield, or mixture of lease and occupancy, at every property.” However the “non-public knowledge algorithms” marketed by these software program corporations, Hochul says, trigger the “housing market distortion” that harms renters “throughout a historic housing provide and affordability disaster.”
Not solely does the regulation outlaw setting rental phrases with the software program, it additionally says that any property homeowners who use the software program can be thought-about colluding. In different phrases, two or extra rental property homeowners or managers who set rents with an algorithm are, in follow, selecting to not compete with one another, whether or not they accomplish that “knowingly or with reckless disregard,” the regulation says. It is a distinct violation from merely utilizing the software program itself.
Using this software program has value US tenants round $3.8 billion in 2024, in accordance with Hochul’s press launch. A 2022 investigation by ProPublica linked RealPage’s algorithm with hovering rental costs throughout the nation. Two years later, the US authorities sued RealPage.
The invoice protects renters from “algorithmic value collusion,” Pat Garofalo, director of state and native coverage on the American Financial Liberties Challenge, stated in a press release. One of many invoice’s sponsors, State Sen. Brad Hoylman-Sigal, stated of the invoice: “This laws will replace our antitrust legal guidelines to clarify that lease price-fixing by way of synthetic intelligence is towards the regulation and guarantee there are boundaries towards behaviors that the federal authorities has discovered result in anticompetitive practices and value fixing.”
The regulation goes into impact in 60 days.