In a unanimous decision on May 21, Jersey City’s City Council voted to prohibit landlords from using AI-driven pricing software accused of inflating rents. The new ordinance, the first of its kind in New Jersey, takes aim at systems like RealPage and Yardi Systems, which have faced mounting legal and public scrutiny for driving up housing costs.
AI Rent Tools Outlawed
The ordinance officially classifies the use of AI-based rent-setting tools as a code violation in Jersey City. Council member James Solomon, who introduced the measure, called it a decisive move against landlords conspiring to raise rents through software. “With the passage of this first-in-the-state legislation, we are putting corporate landlords on notice: if you’re using software like RealPage to coordinate rent hikes, you’re breaking the law and now, tenants and the city have the tools to hold you accountable,” Solomon told the New York Post.
Tenants Gain Legal Power
Under the new ordinance, residents will have the right to sue landlords or submit complaints to city authorities if they believe banned rent-setting software is in use. This measure equips tenants and city officials with legal avenues to challenge landlords suspected of manipulating rents through algorithmic systems.
Rents Soar 50 Percent
A 2024 report by the nonprofit Regional Plan Association revealed that rents in Jersey City have surged by 50 percent since 2015. Rent Cafe currently lists the average rent in the city at $3,702 for a 791-square-foot apartment, ranking Jersey City among the highest rental markets in the country.
Criticism Over Root Causes
While supporters praise the ordinance for protecting tenants, some detractors argue it does not address the deeper issue of limited affordable housing. According to The Gothamist, opponents are concerned the bill’s broad language might unintentionally penalize landlords not using AI pricing. Additionally, a GOP-backed tax bill in the Senate aims to prevent cities from enforcing such bans, intensifying the political debate around rent controls.
National Scrutiny on RealPage
The Washington Post reported that 3.1 million market-rate rental units are managed by companies named in the Justice Department’s lawsuit against RealPage. In several U.S. counties, over one in three multifamily units are overseen by firms allegedly relying on rent-setting programs like RealPage. The DOJ lawsuit revealed that one landlord raised rents by more than 25 percent within 11 months of adopting the software.
New Jersey’s Legal Action
New Jersey Attorney General Mathew Platkin filed a separate lawsuit in April against major landlords and RealPage, alleging that algorithmic pricing led to widespread rent hikes for “tens of thousands” of New Jersey residents. “The defendants in this case unlawfully lined their pockets at the expense of New Jersey renters who struggled to pay the increasingly unlivable price levels imposed by this cartel,” Platkin stated.
Evidence of Accelerated Increases
A 2022 ProPublica investigation found that cities where RealPage’s YieldStar software was implemented saw faster rent increases than those that did not use such systems. The findings supported claims from tenant advocates and lawmakers that AI-powered rent-setting tools have contributed to pricing instability and housing unaffordability in multiple markets.
