Rising rents in New Jersey have become a major issue for renters, especially in cities like Jersey City and Hoboken. Over the past few years, rents have increased significantly, putting pressure on residents who are already struggling with the cost of living. To solve this problem, both cities are taking action in different ways, aiming to protect tenants and ensure fair rental practices.
The main focus is on the use of algorithmic systems by landlords to set rent prices, which critics say are unfair and anti-competitive. These software tools use data to suggest the highest possible rent, and sometimes even encourage landlords to keep apartments vacant to artificially drive up prices. The goal of these systems is to maximize profits, but this comes at the expense of tenants who are facing rent hikes they can’t afford.
- Jersey City introduces an ordinance to prevent landlords from using software to fix rents.
- A lawsuit targets RealPage and major landlords for allegedly colluding to raise rents using algorithmic systems.
- Hoboken’s City Council advocates for a state ban on algorithmic rent-pricing software to protect tenants.
Jersey City Introduces Ordinance to Stop Rent-Fixing
Jersey City has introduced an ordinance aimed at stopping landlords from using algorithmic software to fix rent prices. The software works by analyzing different data sources, including rental prices of nearby buildings, to set the highest possible rent. This eliminates the negotiation process that usually happens between tenants and landlords, leading to uniform rent prices across multiple buildings in the same area.
In some cases, these algorithms also recommend that landlords keep some units vacant to create an artificial shortage. This strategy, in turn, can drive up rents for other available units. The result is that tenants face higher rents without the ability to shop around for better prices, since many landlords are using the same software and pricing their units similarly.
This practice is particularly concerning to residents like Jessica Rasulo, who called landlords using these systems a “digital cartel.” Many others, including Brendan Coughlin and Jessica Brann, shared their personal stories of seeing their rents increase dramatically. David Wilson and Barbara Goldberg pointed out that the software gives landlords an unfair advantage, using it as a tool to squeeze tenants financially.
The new ordinance aims to curb this practice by giving the city more authority to monitor potential rent-fixing. If passed, it will allow tenants to take legal action if they believe a landlord is using pricing software to unfairly inflate rent. The ordinance would also empower the Office of Landlord-Tenant Affairs and the Office of Code Compliance to investigate these practices, with violators facing fines up to $2,000. This proposal signals Jersey City’s commitment to protecting tenants from unfair pricing.
Hoboken Files Lawsuit Against RealPage and Major Landlords
At the same time, Hoboken has filed a lawsuit against RealPage, Inc., a property management software company, and several large landlords in New Jersey. The lawsuit accuses RealPage of providing software that allows landlords to fix rent prices, violating both state and federal laws. The New Jersey Attorney General, Matthew J. Platkin, announced the lawsuit, explaining that these practices were pushing rent prices higher for tenants across the state.
According to the lawsuit, RealPage’s Revenue Management (RM) system is central to the issue. This software analyzes data on local housing markets and helps landlords set rents based on supply and demand. The lawsuit alleges that RealPage’s system has become a tool for price-fixing, where landlords use the software to share sensitive pricing information with each other and set rents at the highest possible levels. This undermines the competitive nature of the rental market and leads to inflated rents.
Attorney General Platkin criticized the practice, saying that the defendants enriched themselves by taking advantage of New Jersey renters. He emphasized that these actions contributed to the state’s affordable housing crisis, depriving residents of their right to fair shelter. The lawsuit also targets the landlords involved, including Hoboken-based AvalonBay Communities, Inc., which owns and manages thousands of rental units in New Jersey.
The complaint argues that RealPage’s software restricts competition by reducing the likelihood of landlords lowering rents. It also alleges that the software encourages landlords to limit the number of available rental units in order to drive up prices. The lawsuit further claims that these practices violate antitrust laws, including the Sherman Act and the New Jersey Antitrust Act.
The lawsuit seeks several outcomes, including stopping the defendants from continuing these practices, imposing fines, and forcing them to return profits made through illegal rent increases. It also calls for a court-appointed monitor to ensure the defendants comply with any court orders.
Hoboken’s City Council Pushes for State Ban on Rent-Setting Software
In addition to the ongoing lawsuit against property management companies, the Hoboken City Council is calling for state-level action to stop landlords from using algorithmic systems to set rent prices. The City Council unanimously passed a resolution urging New Jersey lawmakers to pass a law that would ban two or more landlords from using these systems to recommend or control rent.
Councilman Phil Cohen, who sponsored the resolution, expressed concern that these practices were driving tenants out of their homes. He emphasized the need for legislation to protect renters from exploitation. Councilwoman Emily Jabbour, a co-sponsor, agreed, adding that Hoboken’s experience with rising rent prices is directly tied to the use of predatory software.
Hoboken’s City Council isn’t alone in its concerns about algorithmic pricing. Investigations into property management companies across the country have revealed that companies like RealPage use algorithms to set rents much higher than would be expected in a competitive market. RealPage’s YieldStar software, for example, claims it can help landlords charge 2-5% more than what other landlords are asking. This is especially concerning in a city like Hoboken, where the average rent has jumped to almost $4,000 a month, which makes it harder for working-class families to find a place to live.
The resolution passed by the Hoboken City Council urges the state to act quickly to prevent landlords from using these systems. By calling for a state-level ban on algorithmic pricing, Hoboken hopes to address the issue before it spreads further.
