SAN FRANCISCO (KRON) — On Tuesday, San Francisco became the first city in the nation to have a local ban on automated rent-fixing software. The ban on the use and sale of the technology, penned by Board of Supervisors President Aaron Peskin, aims to ultimately “put more units on the market.”
“Banning automated price-fixing will allow the market to work and bring down rents in San Francisco,” Peskin said. The Board of Supervisors celebrated the ban after several class action lawsuits, three investigations by State Attorneys General, and an inquiry by the Department of Justice.
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According to the consolidated class action lawsuit, 70% of multifamily rental unit landlords in San Francisco use revenue management software technology.
According to the Board of Supervisors, the now-banned software “enables price collusion among large corporate landlords for the purpose of rent-gouging.” By having access to a large landlord data set, the technology maximizes the possible rent hike based on local conditions.
“We’ve noticed dramatic increases in rent for new tenants and new tactics to harass and displace long-term tenants, who are particularly vulnerable because their homes are viewed by real estate investors as underpriced,” Lenea Maibaum, a tenant organizer for the Housing Rights Committee and Veritas Tenants Association member, said.
RealPage, a rent managing software, says they supply 10% of San Franciscan landlords. They say they do not “set” a landlord’s rent but rather advise landlords on potential rent changes. “While we share the San Francisco Board of Supervisors’ goal of helping renters, this ordinance will do nothing to make housing more affordable in the city, where there is a severe supply shortage of rental units that needs to be addressed,” Jennifer Bowcock, a spokesperson for RealPage told KRON4.
Many San Franciscan landlords – such as Brookfield Properties, Greystar, Equity Residential and UDR– use RealPage as their property management technology. According to the Board of Supervisors, RealPage executives told investors that its software has driven “double-digit increases in rent, higher turnover rates, and increased vacancy rates.”
“In San Francisco and across the country, RealPage’s software has contributed to double-digit rent increases, increased rates of eviction, and artificial housing scarcity,” said Lee Hepner, an antitrust lawyer at the American Economic Liberties Project, who applauds the ban as she believes it is consistent “with wanting new housing construction to result in lower rents.”
“Let’s be clear: RealPage has exacerbated our rent crisis and empowered corporate landlords to intentionally keep units vacant. So we’re taking action locally to ensure our working renters can afford to live here,” Peskin said.
With the incorporation of the ban, the ordinance should introduce the following:
Bans the sale and use of software that “combines non-public competitor data to set, recommend or advise on rents and occupancy levels,” such as RealPage or Yardi.
Enables local enforcement through civil action and private right of action by tenants who the technology has harmed.
Our software is purposely built to be legally compliant and can be configured to comply with the new ordinance should it pass a final vote. The ordinance’s misplaced focus on nonpublic information is a distraction that will only make San Francisco’s historical problems worse by banning an important component of pricing technology that RealPage uses responsibly and that benefits residents, property managers, and the rental housing ecosystem as a whole. RealPage is proud of the solutions we provide to the San Francisco community, and we encourage the Board of Supervisors to identify real solutions to increase the supply of rental housing and access to affordable housing.”
Jennifer Bowcock, Senior Vice President, Communications & Creative at RealPage
According to Maibaum, the Housing Rights Committee has advocated for the technology’s ban for over two years.
In his 2024 State of the Union Address and subsequent briefings, President Biden identified algorithmic price-fixing as a threat to housing affordability and a policy priority in the fight against corporate rent-gouging.
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