New York Legislature moves against algorithms that critics say enable landlords to push rents upward
A bill approved Tuesday against rent algorithms will soon go to Gov. Kathy Hochul, who can sign it into law or veto it. Credit: Newsday/Thomas A. Ferrara
ALBANY — The State Legislature has approved a bill to outlaw the use of algorithms that some landlords have used to set higher rents and reduce competition that could hold rents to more affordable levels.
The New York measure would prohibit landlords and real estate management companies from colluding to set rents and avoid the pressure of competition, according to the bill. The U.S. Justice Department said the practice hurt millions of Americans.
The bill approved Tuesday will soon be sent to Gov. Kathy Hochul, who can sign it into law or veto it.
Assemb. Linda Rosenthal (D-Manhattan), who co-sponsored the bill, said, "Landlords found a new way to skirt the antitrust law."
"Modern day robber barons are no longer striking deals to distort the market in smoke-filled back rooms," Rosenthal said in a statement. "Instead, they're training algorithms."
The software is used to analyze landlords’ private rental records on rent levels in specific areas and other records, including the supply of units and the expiration dates of leases or rental contracts.
"Rent prices in New York state are out of control," said Sen. Brad Hoylman-Sigal (D-Manhattan), the Senate sponsor.
"Once signed, New York will be the first state in the nation to make it explicitly clear that whether it is done in person or through an algorithm, price fixing is illegal," he said in a statement
Supporters of the measure say some property owners are using algorithms with artificial intelligence to avoid the intent of antitrust laws based on the Sherman Act of 1890. That federal law outlaws "every contract, combination, or conspiracy in restraint of trade," and any "monopolization, attempted monopolization, or conspiracy or combination to monopolize."
"With New York state in the throes of an affordability crisis," the bill states, "it is critical that we crack down on practices that artificially inflate rents for tenants across the state."
The U.S. Justice Department is pursuing a civil case involving algorithms and landlords.
The Justice Department cites internal documents and sworn testimony, including a statement by a company that told a landlord he could raise a rent by $50, instead of the $10 he planned.
That company, RealPage Inc., based in Texas, is an AI company that works with real estate companies worldwide. The company said in a statement its software was designed to comply with all antitrust laws.
Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.
