GOP Tax Bill Threatens Local Bans on Rent Algorithms

Local lawmakers in markets across the country have voted to ban algorithmic rent-setting, but the wave of action against the platforms may not hold up for long if House Republicans’ tax bill comes to pass.

The megabill approved in the House of Representatives last week includes a provision blocking state and local control of artificial intelligence and automated decision systems for a decade, the Wall Street Journal reported.

That measure could provide relief to the likes of RealPage and Yardi Systems, whose business models are coming under policy fire in markets including Philadelphia, Providence and San Francisco.

“We would no longer be able to enforce this ban,” Providence City Council President Rachel Miller said of a bill that’s been in place for less than a fortnight.

If the provision stands, local municipalities may weigh suing the federal government or reinforcing other tenant protection measures.

New Jersey Attorney General Matthew Platkin last month sued RealPage and 10 landlords, including AvalonBay and Greystar, alleging the owners worked with the software company to coordinate pricing and avoid competition. The Department of Justice under President Joe Biden brought a civil case, although it closed an antitrust investigation last year.

Scrutiny towards landlords using RealPage software emerged after an October 2022 report by ProPublica, which detailed how rents were rising faster in markets where the rent software was prevalent than in those where it wasn’t. The story suggested software allowed landlords to know what competitors were charging and to raise rents in tandem.

RealPage and rival Yardi Systems have denied allegations regarding their software. Supporters argue the algorithms recommend prices that help landlords maximize revenue by keeping units rented, rather than vacant for long stretches.

While the House approved the tax bill, the Senate does not appear poised to do the same without major changes, which could work in the favor of renters and activists who have railed against the algorithmic software.

Price-fixing and class action litigation will also likely continue even if the GOP measure survives, potentially putting RealPage on the hook for $73 billion in cumulative damages, according to policy consultant Capstone.

— Holden Walter-Warner