New Jersey has moved to crack down on the software that some landlords use to set rents, with Governor Mikie Sherrill signing a new law banning the practice. Supporters say the technology has quietly driven housing costs higher across the state, and New Jersey is now taking aim at both the tools themselves and the companies that stand behind them.
At the heart of the law is a type of software that analyzes private data, including the rents and vacancy rates at other properties, and then recommends how much a landlord should charge. Rather than each property owner setting prices independently, the programs feed them pricing suggestions built from what their competitors down the street are already doing.
Supporters of the new law argue that this dynamic can push rents higher by nudging landlords to raise prices together. Lawmakers say the effect is to weaken the ordinary competition that would otherwise help keep rents in check, replacing it with a system in which increases ripple outward across an entire local market.
The central objection is that the tools put competing landlords on the same team against renters. According to lawmakers, the algorithms allow property owners to effectively coordinate their prices, move in lockstep and push rents higher and higher, even without any direct agreement or conversation between the landlords involved.
The financial toll, backers of the law say, has landed on tenants. Lawmakers estimate that the software has cost some renters hundreds of dollars a year, money quietly added to their housing bills through pricing recommendations they had no way of seeing, questioning or negotiating down.
The new law is not the state's only response. New Jersey's attorney general is also suing companies that officials say enabled the practice, opening a legal front against the firms behind the software even as the ban itself takes aim at how such tools can be used by landlords across the state.