New York becomes first state to ban efficient AI rent-pricing algorithms

New York Governor Kathy Hochul signed legislation on Thursday banning landlords from using AI-powered algorithms to set rental prices, making it the first state to outlaw such software. The law addresses what Hochul calls “housing market distortion” during a historic affordability crisis, following similar city-level bans in Jersey City, Philadelphia, San Francisco, and Seattle.

What you should know: The legislation targets algorithmic pricing software that companies like RealPage offer to landlords for rent optimization.

• RealPage’s software helps landlords “optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property.”
• The algorithms can also determine ideal occupancy levels and lease renewal terms beyond just pricing.
• Property owners using such software will be considered to be colluding with each other, whether they do so “knowingly or with reckless disregard.”

The big picture: This represents the first statewide crackdown on what regulators view as algorithmic price-fixing in the rental market.

• The use of pricing algorithms has cost US tenants approximately $3.8 billion in 2024, according to Hochul’s office.
• A 2022 ProPublica investigation linked RealPage’s algorithm to soaring rental prices nationwide.
• The US government sued RealPage two years after the investigation.

Why this matters: The law updates antitrust regulations to explicitly address AI-driven price coordination in housing markets.

• Pat Garofalo from the American Economic Liberties Project says the bill protects renters from “algorithmic price collusion.”
• State Sen. Brad Hoylman-Sigal, one of the bill’s sponsors, emphasized that the legislation “will update our antitrust laws to make clear that rent price-fixing via artificial intelligence is against the law.”

What’s next: The law takes effect in 60 days, establishing a legal precedent that other states may follow as AI pricing tools become more prevalent across industries.