Jersey City, New Jersey Shuts Down AI, Banning Landlords From Using The Latest Price Setting Software To Artificially Increase Rents
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Jersey City, New Jersey, has banned algorithmic software favored by landlords for setting prices and collecting payments.
The City Council voted unanimously on May 21 to ban the use of AI-driven software, such as RealPage and Yardi Systems, which critics have blamed for artificially inflating rents. Advocates of the ordinance, a first for the Garden State, are not alone in their criticism. The Biden Justice Department sued RealPage for the same reasons. However, the tax bill in the Senate aims to bar the ban, The Wall Street Journal reports.
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Under the Jersey City ordinance, the use of algorithmic software based on AI will be a code violation. City Council member James Solomon, who introduced the ordinance, called the new law a "bold stand" against landlords colluding to force rents higher by using the software. "With the passage of this first-in-the-state legislation, we are putting corporate landlords on notice: if you're using software like RealPage to coordinate rent hikes, you're breaking the law — and now, tenants and the city have the tools to hold you accountable," Solomon told the New York Post.
Under the ordinance, residents would be able to sue their landlords and submit complaints to the city, should they suspect that management companies or landlords have been using banned software.
Rents in Jersey City have increased by 50% since 2015, according to a 2024 report by the nonprofit Regional Plan Association. Rent Cafe lists the average rent in Jersey City as $3,702 for a 791-square-foot apartment, making it one of the most expensive rental cities in the U.S., reports the Gothamist.
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The ordinance, as evidenced by the new GOP tax bill, is not without its detractors who, according to The Gothamist, feel that the law doesn't get to the heart of the issue — a lack of housing. Other landlords fear that the general language used in the bill leaves landlords who are not using algorithmic pricing open to penalties.
The ordinance blames algorithmic pricing as a tool used by landlords to aggregate various factors that determine rent prices — including market rates, lease length, supply levels, and more — to tip the scales in favor of landlords when calculating rental prices.
The Washington Post identified 3.1 million market-rate rental units under the management of companies named in the Department of Justice lawsuit in January. According to the Post, there were 10 counties where more than 1 in 3 multifamily units are managed by a property company allegedly using a rent-setting program from RealPage. The DOJ's suit alleged that one landlord, utilizing RealPage revenue management software, began increasing rents within a week of implementing the technology and raised rents by more than 25% in 11 months, according to The Post.ProPublica reported in 2022 that it also found evidence of faster rental increases in cities where RealPage's YieldStar software was used by property management firms.
New Jersey Attorney General Mathew Platkin has taken up a separate case against algorithmic pricing, filing a suit in April against the Garden State's largest landlords and RealPage, alleging that "tens of thousands" of New Jersey residents overpay in rent. "The defendants in this case unlawfully lined their pockets at the expense of New Jersey renters who struggled to pay the increasingly unlivable price levels imposed by this cartel," Platkin stated in a statement.
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This article Jersey City, New Jersey Shuts Down AI, Banning Landlords From Using The Latest Price Setting Software To Artificially Increase Rents originally appeared on Benzinga.com
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