San Francisco this week moved to ban using property administration software program that critics allege is used to artificially elevate rents and discourage competitors.
Supporters say the ban can be the primary of its variety concentrating on software program that has allegedly performed an outsized function in growing the price of housing — not simply in notoriously costly San Francisco, however in markets throughout the nation.
“Within the outdated days, collusion between opponents occurred in a smoke-filled again room,” mentioned Aaron Peskin, president of the San Francisco Board of Supervisors, who proposed the ban. “These days, through the use of this software program, actual property house owners share nonpublic competitor information into a standard information pool, which is then used to set rents and occupancy phrases.”
Throughout the board’s assembly Tuesday, Peskin mentioned he hoped the transfer can be replicated in different cities and counties.
“Banning algorithmic price-gouging is pro-housing coverage,” he mentioned.
The choice would have an effect on firms similar to RealPage, which gives property administration software program. The Texas-based firm is thought for utilizing an algorithm that provides actual property house owners strategies on how a lot to cost for lease.
Representatives for RealPage didn’t instantly reply to a request for remark Thursday.
However in a June 18 assertion, Chief Government Dana Jones mentioned that the corporate’s software program helps each landlords and renters, and that the basis causes of rising rents are the shortage of reasonably priced housing, growing demand and inflationary prices of constructing and insuring housing.
“Housing affordability must be the true focus,” Jones mentioned within the assertion, which the corporate issued to handle what it characterised as “false and deceptive claims” about it and its software program.
“RealPage is pleased with the function our clients play in offering protected and reasonably priced housing to hundreds of thousands of individuals.”
RealPage and its software program, often known as YieldStar, have been utilized by property administration firms in a number of states. In 2022, ProPublica reported that RealPage was utilizing personal information to suggest rents, in addition to discouraging landlords from negotiating costs individually with renters.
Some staff instructed the nonprofit information outlet that landlords are, in some circumstances, inspired to maintain models vacant to justify elevating rents.
Based on the ordinance superior by supervisors Tuesday, as many as 70% of landlords in San Francisco are utilizing some form of related software program to set lease charges.
“The software program has contributed to double-digit lease will increase, increased emptiness charges and better charges of eviction,” a employees report acknowledged.
In its assertion, RealPage mentioned landlords are free to reject any lease suggestions made by the software program. The corporate additionally denied allegations that it advises withholding vacant models from the market, and mentioned its software program is utilized by a smaller portion of the residential rental market than has been claimed in media studies and authorized filings.
The corporate has confronted allegations of price-fixing elsewhere. In November, the District of Columbia’s legal professional normal filed go well with in opposition to RealPage and 14 massive landlords, referring to them as a “District-wide housing cartel.”
RealPage’s algorithm, the legal professional normal’s workplace alleged in a assertion saying the go well with, helped artificially inflate costs, costing renters hundreds of thousands of {dollars}.
Arizona Atty. Gen. Kris Mayes additionally filed go well with in opposition to the corporate and 9 main condominium landlords in February.
“Within the final two years, residential rents in Phoenix and Tucson have risen by not less than 30% largely due to this conspiracy that stifled truthful competitors and primarily established a rental monopoly in our state’s two largest metro areas,” Mayes mentioned.
Each lawsuits are pending.
San Francisco’s ordinance is scheduled for last board approval Sept. 3. It could then go to Mayor London Breed, who would determine whether or not or to not signal it.
