New Jersey Gov. Mikie Sherrill signed a law Monday restricting landlords’ use of algorithms to set rents, as state officials seek to rein in rising housing costs.
The law, called the FAIR Act, prohibits certain types of sensitive data — including rental prices, housing supply, occupancy levels and lease termination dates — from being used to inform rent-setting algorithms. It also bars landlords from coordinating to raise rents in parallel. The law will take effect next summer.
“These tools put competing landlords on the same team against renters,” Sherrill said. “Landlords can use these algorithms to coordinate prices, move in lockstep, and push rents higher and higher. It's collusion by algorithm, and it's illegal, and it stacks the deck against renters.”
Sherrill has made tackling the Garden State’s affordability crisis a top priority, and she said rising rents are “out of control.”
“The last thing our market needs is a tool designed to push renters to the brink,” Sherrill said.
RealPage, a software company that makes the kind of rent-calculation products targeted by the new law, said it will configure its software to comply. But the company criticized state leaders for imposing the restrictions.
“There is a need for more housing supply, not restrictions on analytical software,” RealPage spokesperson Patrick Mendoza said in a statement. “Rents fall when more homes are built, as is evident in other parts of the country.”
The New Jersey Apartment Association, which represents landlords in the state, did not respond to a request for comment.
The labor union 32BJ SEIU, which represents thousands of janitors, security workers, residential porters and other workers across the Garden State, advocated for the new law. Ana Maria Hill, the union’s New Jersey state director, said the measure would bring new protections to its members.
“Our members know better than anyone what the housing crisis looks like, because they’re living it every single day,” Hill said. “The housing crisis wasn’t created by algorithms, but algorithms are contributing to it, and today we are saying no to them.”
The new law comes after New Jersey sued RealPage and several major landlords in federal court last year, alleging they colluded to manipulate rents across the state.
That lawsuit remains ongoing.
"This alleged rent-raising scheme violated state and federal antitrust laws, state and federal consumer protection laws, forcing thousands of New Jerseyans to overpay for rent month after month,” said Sundeep Iyer, the executive assistant attorney general for the state Office of the Attorney General. “In New Jersey, tenants should not have to worry about an algorithm overcharging them for rent. That's why we will keep pressing our case against RealPage in court.”
Iyer said the new law will be a critical tool for the state to combat rising rents.
“Whether landlords are colluding using newfangled algorithms or are colluding the old-fashioned way, that must stop today, or these entities risk antitrust liability,” Iyer said.
New York has a similar law on the books, signed by Gov. Kathy Hochul last year. RealPage has since sued over the New York law, arguing that it violates the company’s First Amendment free speech rights.
That lawsuit is also ongoing.
Sherrill said she is confident New Jersey’s law can withstand legal challenges.
“I think we've crafted this incredibly carefully to both fit within the legal system as well as protect renters from collusion and wrongdoing, and at the same time, for those people that aren't colluding, make sure we're not overly broad in this,” Sherrill said.
New Jersey’s law follows local measures enacted in Jersey City and Hoboken. Jersey City Mayor James Solomon, who sponsored that city’s ordinance while serving as a councilmember, said he was grateful that state authorities would now take the lead on the issue.
“We always thought the enforcement should be at the state level. The attorney general really has the tools to investigate the developers and the landlords who are using these algorithms, and the city enforcement tools are more difficult,” Solomon said. “So we had a situation where the city engaged in a pretty long investigation, but ultimately weren't able to bring charges forward just because we didn't have the investigatory tools.”
Solomon said city officials worked with state lawmakers to craft the new law.
“If you write the law too loosely, you basically allow the developers and landlords to engage in this type of price fixing,” Solomon said. “They’re smart. They got great lawyers. They’re going to exploit it. So we really worked with them on the draft language to make sure that the bill didn’t include a bunch of loopholes that could be exploited.”
