Hochul Looks to Ban Algorithm-Based Rent Price Fixing in New York

Hochul is expected to announce the proposal in her State of the State speech Tuesday, a week after the U.S. Justice Department sued six of the country’s biggest landlords for allegedly using “anticompetitive pricing algorithms” to set rents.

New York Gov. Kathy Hochul wants to ban the use of real estate management software that sets rent prices via algorithm—what federal prosecutors say can amount to collusion that artificially inflates rents during a nation-wide housing crisis.

Hochul is expected to announce the proposal in her State of the State speech Tuesday, a week after the U.S. Justice Department sued six of the country’s biggest landlords for allegedly using “anticompetitive pricing algorithms” to set rents.

“I’ve said it before and I’ll say it again: the rent is too damn high and New Yorkers need our help,” Gov. Hochul said in a statement shared with City Limits ahead of her annual address.

“Last year, we passed the most significant housing legislation in generations, working to build more supply and increase tenant protections,” Hochul continued. “There’s more work to do, which is why I’m proposing new legislation to crack down on algorithmic abuses that increase the cost of living and force rents sky-high. We need to ban the sale or use of price-fixing software—so tenants have a fair shot at an affordable home.”

Should her proposal pass, New York would join jurisdictions like San Francisco and Philadelphia in prohibiting such software, which often uses competitor data to set suggested rents. A report by the White House’s Council of Economic Advisers in December that sought to “quantify the anticompetitive impact of algorithmic pricing on rents across the country” estimated the practice cost renters $3.8 billion in 2023, what its authors warned “is likely a lower bound on the true costs.”

“Algorithmic pricing weakens competition because it can facilitate price coordination among landlords who would otherwise be competing,” the White House report reads. “Our analysis indicates that if price coordination was eliminated, there would be an economically meaningful decrease in price mark-ups for rental units using pricing algorithms.”

Among the most popular of these technologies comes from the company RealPage, which is the target of an antitrust lawsuit filed by the Justice Department, following reporting on its practices by the investigative news outlet ProPublica. RealPage has characterized the criticism against it as “demonstrably false,” saying its customers have “100 [percent] discretion to accept or reject software price recommendations.”

But in its legal complaint against the company and six major landlords who used the software, the DOJ alleges that, “RealPage replaces competition with coordination.”

“It substitutes unity for rivalry. It subverts competition and the competitive process,” the complaint reads. “It does so openly and directly—and American renters are left paying the price.”

Nationwide, nearly half of the 42.5 million renter households in the U.S. are considered rent-burdened, meaning they spend at least a third of their income on housing, according to the U.S. Census Bureau.

In New York, that rate is even higher, with more than 52 percent of renters meeting that threshold, according to an analysis by the state comptroller last year.

Gov. Hochul is set to deliver her State of the State beginning at 1 p.m. Tuesday. The speech will be livestreamed on the governor’s website here.

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