Jersey City Council has prohibited the use of AI for determining rent.

Jersey City Enacts Ban on AI-Driven Rent Setting

Jersey City landlords will have to revert to more traditional methods for setting rent. On Wednesday, the Jersey City Council unanimously approved an ordinance that bars the use of AI-powered rental pricing software.

This legislation, introduced by Councilman James Solomon, is a first for New Jersey.

According to the ordinance, tools from rental software providers like RealPage and Yardi Systems have been implicated in violations of local housing codes. Supporters of the ban argue that these technologies enable landlords to artificially raise rents and limit housing availability.

In a statement, Solomon referred to the legislation as a “bold stand” against what he called rental collusion.

“With this law, we’re sending a clear message to landlords. If you rely on software like RealPage for rent hikes, you’re acting unlawfully. Tenants and the city now have the means to hold you accountable,” he said.

The enforcement provisions allow residents to either file complaints or take legal action against their landlords for using such algorithm-driven pricing methods.

However, some critiques of the ordinance suggest it doesn’t tackle the underlying issue: the shortage of new housing. There’s also concern that the bill’s broad language may lead to excessive penalties for property owners, as reported by Gossa Mist.

Jersey City faces a significant affordability crisis, with rent prices soaring by 50% since 2015. Recently, it was ranked as the third most expensive city in the U.S. for renters, trailing only New York City and San Francisco.

Advocates of the new law argue that it prevents landlords from leveraging AI tools to increase rent prices.

These systems typically analyze local pricing, occupancy rates, and lease agreements to help landlords maximize profits by selecting the most advantageous rental prices and lease terms.

A 2022 ProPublica survey indicated that cities where RealPage’s software, AldeStar, is widely used experience faster rent increases.

The ordinance comes on the heels of a similar proposal introduced last fall, which is still under consideration in the state legislature, according to Gossa Mist.

In April, New Jersey Attorney General Matthew Platkin filed a lawsuit against the state’s largest landlord and 10 others associated with RealPage, alleging that the software led to unjust rent increases for residents.

“This defendant unlawfully profited at the expense of New Jersey tenants who are grappling with continually rising rents,” Platkin stated in a press release.