Jersey City Bans Rent Algorithms After RealPage Controversy

Maybe landlords are using software to collude illegally in setting rents. Maybe they aren’t.

But Jersey City politicians aren’t waiting to see if ongoing lawsuits prove that allegation.

Instead, the City Council voted unanimously Thursday to ban apartment owners from using products like those from RealPage and Yardi Systems to suggest rents. The bill had just been introduced this month, according to NJ.com.

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

The Jersey City ordinance is being pushed by building service workers union 32BJ SEIU and tenant activists, including Kevin Weller, who has a slew of lawsuits pending against RealPage and landlord Equity Residential. Weller is president of the tenants association at Portside Towers, which Equity Residential owns.

The narrative that landlords are using RealPage software in a way that violates antitrust laws stems from an October 2022 ProPublica story, which detailed rents rising faster in markets where the rent software was prevalent than in those where it wasn’t. The story suggested that the software allowed landlords to know what their competitors were charging and to raise rents in tandem.

One Jersey City tenant, Jessica Bran, told the council that the algorithms “are engineered to optimize revenue by leveraging shared data from competing landlords,” NJ.com reported.

RealPage and its primary rival Yardi Systems have denied that there is anything illegal about their software.

Defenders of the products say the algorithms recommend prices that allow landlords to maximize revenue by keeping their units rented, rather than vacant for long periods of time — a benefit to tenants.

“If it were true that the software enabled price-fixing, I would 100 percent be on the side of the lawsuits — but it’s simply not what the software does,” Dom Beveridge, whose company was acquired by RealPage in 2017, told the Associated Press last summer.

“These algorithms are only functionally capable of optimizing one property at a time,” Beveridge said. “They can’t say, ‘I’m going to take property A, B and C and figure out collectively what they should do together,’ which is the allegation being made.”