Jersey City becomes the first municipality in New Jersey to ban landlords from using AI software to set rental prices, following unanimous approval from the city council amid growing concerns over algorithmic price manipulation.
At a Glance
- Jersey City Council unanimously voted to ban landlords from using AI software like RealPage to set rental prices
- The ordinance allows residents to sue landlords or file complaints if such software is discovered in use
- NJ Attorney General Matthew Platkin has already sued RealPage and 10 landlords for allegedly forcing residents to overpay for rent
- Jersey City has experienced a 50% rent increase since 2015 despite having strong rent control laws
- Critics argue the ban doesn’t address the fundamental housing supply shortage
First-in-State Ban on AI Rent-Setting Software
Jersey City officials have taken unprecedented action against what they view as technological manipulation of the housing market. The city council unanimously approved an ordinance prohibiting landlords from using artificial intelligence software programs like RealPage and Yardi Systems to determine rental costs.
These programs have come under fire for allegedly enabling coordinated rent increases across properties that would otherwise compete with each other in an open market. The ban marks the first of its kind in New Jersey and creates a new legal framework for tenants to challenge suspected algorithmic pricing.
Councilman James Solomon, who introduced the legislation with support from the 32BJ SEIU union, framed the ordinance as a direct challenge to corporate landlord practices. The new law establishes a clear enforcement mechanism, allowing residents to file complaints or lawsuits if they suspect their landlord is using banned AI pricing tools.
The city’s action comes as a similar statewide bill remains stalled in the New Jersey Legislature, highlighting Jersey City’s position at the forefront of this regulatory approach.
Growing Legal Challenges to Algorithmic Pricing
The city’s ban follows significant legal action already underway across New Jersey targeting these same AI pricing systems. State Attorney General Matthew Platkin filed a lawsuit against RealPage and ten landlords, alleging their software artificially inflated rental prices throughout the state. “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 in his legal action, which directly inspired the Jersey City ordinance.
“Algorithmic pricing systems are being used to artificially inflate rents across our state. Jersey City is home to perhaps the strongest rent control laws in America, but somehow has also witnessed some of the steepest rent increases in the nation,” said Kevin Weller, president of the Portside Towers East Tenant Association, who has filed his own lawsuits against RealPage and Equity Residential.
These legal challenges are bolstered by a 2022 ProPublica investigation that found cities using rental algorithms experienced faster rent increases than local market conditions would normally justify. At Portside Towers specifically, tenants filed a $400 million federal class-action lawsuit against Equity Residential over what they describe as AI-driven rent hikes that bypass the spirit of rent control laws while technically remaining within legal boundaries.
Market Impact and Criticism
Jersey City has emerged as one of the most expensive rental markets in the United States, with a documented 50% increase in average rents since 2015. This dramatic rise has occurred despite the city having what tenant advocates describe as some of the strongest rent control regulations in the country. Supporters of the ban point to this disconnect as evidence that algorithmic pricing tools have found ways to circumvent traditional market constraints and regulations.
“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,” stated Councilman Solomon in describing the ordinance as a “bold stand” against corporate pricing practices.
Critics of the ban argue it fails to address the fundamental housing shortage driving high rental costs. They contend the ordinance may unnecessarily penalize property owners for using modern business tools while doing nothing to increase housing supply or improve affordability in the long term.
Neither RealPage nor Yardi Systems provided comments regarding the new ordinance, though both companies face mounting legal challenges across multiple jurisdictions related to their pricing software.
Setting a Regulatory Precedent
The Jersey City ordinance potentially creates a model for other municipalities facing similar housing affordability challenges. By specifically targeting the technology behind pricing decisions rather than just the prices themselves, the approach represents a new frontier in housing regulation. The ban reflects growing concerns about AI’s role in essential markets and could influence similar actions beyond New Jersey as cities nationwide struggle with housing affordability.
“By prohibiting algorithmic collusion, it offers a chance to restore some fairness to our housing market,” Weller noted, expressing hope that the ban will help address the disconnect between strong tenant protections on paper and rapidly rising rents in practice.
As the first enforcement actions under the new ordinance take shape, the effectiveness of this approach will be closely monitored by housing advocates, property owners, and government officials throughout the region. Whether the ban will meaningfully impact rental prices or simply push pricing strategies into different forms remains to be seen, but the decisive action signals growing regulatory attention to the intersection of technology and housing markets.
