Opinion: Algorithms are inflating our rent. It’s time to stop them.

If there is one thing New Yorkers can agree on, it’s that “the rent is too damn high.” There are, of course, a number of factors contributing to skyrocketing rents in New York City: a lack of affordable housing (and housing in general), inflation and increasing utilities costs, just to name a few. But there may be another, less apparent, reason why so many New Yorkers are grappling with increasing rents: algorithms.

As the eye-opening 2022 ProPublica investigation discovered, landlords are flocking to real estate management software that sets rental prices for them. The software uses artificial intelligence, or an algorithm, to consider market data, including private pricing information provided by real estate companies, and then recommends rents for landlords to charge prospective tenants. This software is designed to maximize profits for landlords.

We have heard directly from tenants in our districts that their landlords in New York City are using this technology; as a result, our constituents have seen notable increases in their rents, as well as abnormally long apartment vacancy periods in their buildings. It’s clear that these algorithms, while perhaps helping landlords make more money, are harming renters and significantly impacting their ability to afford their apartments. Given our state and city’s housing crisis, it is unconscionable for landlords to employ algorithms to inflate the rents on hard-working New Yorkers, as well as skirt our existing antitrust laws.

Following the whims of artificial intelligence, instead of directly negotiating with tenants, is anti-capitalistic and robs residents of their ability to advocate for themselves. Essentially, this software enables competing landlords to collude by sharing proprietary information to set rental prices, ultimately inflating the value of their properties. If landlords were meeting in person to discuss their prices, make changes based on what they learned from each other, and agree on a set of prices that most benefits them, then we would call that what it is, price fixing, and it would be illegal under both federal and state law. 

And that is exactly what the U.S. Department of Justice and several states alleged when they filed a lawsuit against RealPage, the largest company behind this price-setting software, as well as six of the nation's biggest landlords who have utilized it. According to the Department of Justice, these companies used “algorithmic pricing schemes that harmed renters” by sharing “sensitive information about rental prices” and using “algorithms to coordinate to keep the price of rent high.”

The impact that this price coordination has had on the rental market is devastating. According to a 2024 analysis by the White House Council of Economic Advisors, anticompetitive pricing technology charged tenants across the country an extra $3.8 billion in rent in 2023 alone.

Though the federal government appeared to be taking decisive action on this issue under President Joe Biden, it is unlikely that this will continue under the current administration. That’s why it is essential for New York state to become the first state in the nation to pass and enact legislation to outlaw price-fixing algorithms. We are sponsoring a bill in the state Legislature to do just that (S.7882/A.1417). If passed, our bill would update our state’s antitrust laws by prohibiting landlords and property managers from setting rents or determining changes to rents based on algorithm-driven recommendations which take into account private pricing information. Importantly, the bill would also prohibit companies from knowingly operating platforms that facilitate collusive algorithmic rent-setting, or from doing so with reckless disregard.

By prohibiting landlords from using algorithms to artificially inflate rents or reduce housing supply, we can ensure fairness and transparency in the rental housing market. This legislation would update our antitrust laws to make clear that rent price-fixing via artificial intelligence is against the law and set clear boundaries against behaviors that the federal government has found lead to anticompetitive practices and price fixing.

Laws prohibiting software using price fixing algorithms for rental units are already on the books in six cities: San Diego, San Francisco, Berkeley, Philadelphia, Minneapolis and Providence. Colorado recently passed legislation to ban this software statewide, but the bill was just vetoed by Gov. Jared Polis. U.S. Sen. Amy Klobuchar introduced federal legislation to tackle this burgeoning issue, and U.S. Sen. Elizabeth Warren recently expressed concerns about how the new federal budget bill could shield companies that use these algorithms.

As we enter a new digital age, where artificial intelligence and algorithms are set to wield untold power over virtually every aspect of our everyday lives, it is imperative that we put safeguards in place to protect New Yorkers from those who weaponize these technological achievements to enrich themselves. Let’s call these algorithms what they are – illegal price-fixing tools – and pass our legislation to prohibit their use in New York state before it's too late.