SF Moves to Ban AI Housing Tools Linked to Price Fixing in Thousands of Rentals

San Francisco is poised to become the first city in the country to ban algorithmic software used to set and raise rental prices.

The Board of Supervisors on Tuesday unanimously adopted an ordinance blocking the use and sale of artificial intelligence tools that allegedly enable price fixing by large corporate landlords.

The city’s ordinance comes as the U.S. Department of Justice is investigating RealPage, a revenue management company whose software is used by landlords to maximize rents. Attorney generals across the country have filed lawsuits alleging RealPage’s tools empower collusion and price-gouging among large corporate property owners.

“Banning algorithmic price gouging is pro-housing policy, and it’s entirely consistent with our shared goal of a functioning housing market that meets our real housing needs,” Board President Aaron Peskin, who introduced the legislation, said at Tuesday’s meeting. “Wall Street has gotten into the housing business, and it’s a phenomenon we have seen here locally.”

Tens of thousands of units in San Francisco are estimated to be owned by companies that use AI technology, according to Lee Hepner, senior legal counsel at the American Economic Liberties Project.

“Landlords, who should be ordinarily competing against each other, are instead adopting the price recommendations of this third-party revenue management software. And the effect of that is an old-fashioned price-fixing scheme,” Hepner said. “It is not unlike the kind of price fixing that antitrust laws have addressed for well over a century.”

Tenant advocates have similarly raised concerns about rent hikes coordinated by property owners using software to artificially inflate rents and vacancy rates.

“Tenants experience the effects of RealPage in the form of rent hikes, miscellaneous fees to get around rent control and arbitrary evictions. It’s a dangerous tool in the hands of well-resourced corporate landlords,” Lenea Maibaum, a tenant organizer for the Housing Rights Committee and a member of the Veritas Tenants Association, said in a statement. “Since Veritas, then Brookfield (Properties), took over my apartment building and the management of thousands of other rental units in San Francisco, we’ve noticed dramatic increases in rent for new tenants and new tactics to harass and displace long-term tenants.”

The legislation will go before the board for final approval on Sept. 3.

Peskin said he hopes the legislation will be a model for other local governments around the country, comparing the urgency around the ordinance to the city’s early regulation of Airbnb.

“Let’s build housing for renters, not real estate investors,” he said.