New York bans setting rental prices using artificial intelligence

New York Governor Kathy Hochul signed the law Thursday Legislation prohibiting the use of price-fixing software By landlords to set rental rates. New York is the first state to ban algorithmic pricing by landlords, following a number of citywide bans in Jersey City, Philadelphia, San Francisco and Seattle.

Software companies Like the real page Providing algorithms to landlords that can determine rental prices. The software can also help determine the ideal number of people living in the unit or terms for renewing a lease. RealPage He says She can help her clients “optimize rentals to achieve the highest overall return, or combination of rent and occupancy, at each property.” But the “private data algorithms” these software companies advertise, Hochul says, are causing “a distortion of the housing market” that is hurting renters “during a historic crisis in housing supply and affordability.”

Not only does the law prohibit setting the terms of a software rental, it also states that any landlord using the software will be considered complicit. In other words, two or more rental property owners or managers who set rents using an algorithm are, in practice, choosing not to compete with each other, whether they do so “knowingly or with reckless disregard,” as the law states. This is a clear violation simply for using the software itself.

Using this software cost U.S. renters about $3.8 billion in 2024, according to Hochul’s press release. A 2022 Investigation by ProPublica RealPage’s algorithm linked it to rising rental prices across the country. Two years later, the U.S. government He filed a lawsuit against RealPage.

The bill protects renters from “algorithmic price collusion,” Pat Garofalo, director of state and local policy at the American Economic Liberties Project, said in a news release. press release. One of the bill’s sponsors, state Sen. Brad Hoylman Segal, said of the bill: “This legislation will update our antitrust laws to make clear that setting rental prices via artificial intelligence is against the law and ensure there are limits against behaviors that the federal government has found to lead to anticompetitive price-fixing practices.”

The law enters into force within 60 days.