UPDATE: Oct. 29, 2024: Philadelphia has become the second major U.S. city to pass a ban on revenue management software. The bill passed the City Council on Oct. 24, and is currently awaiting Mayor Cherelle Parker’s signature.
If signed into law, the bill would prohibit the use of any nonpublic competitor data to recommend or suggest rental prices, fees, terms or occupancy levels in the city, including the use of software to analyze the data. This would not include setting pricing for affordable housing, reports that publish aggregated rent data or market research applications.
Violators of the order could be sued by the city or by current or prospective tenants, and face a fee of up to $2,000 per violation, according to the bill. Violations are counted per unit per day. The ordinance is effective immediately once signed.
Original story appears below.
Dive Brief:
- A San Francisco ordinance banning the use of automated rent-setting software that makes use of nonpublic data took effect on Oct. 14. The ban was passed by the San Francisco Board of Supervisors on July 30 and signed by Mayor London Breed on Sept. 13.
- The ordinance asserts that the programs allow residential landlords to indirectly coordinate with one another, raising rents, lowering occupancy rates and increasing evictions. As of Oct. 14, multifamily owners, operators or vendors that sell or use revenue management software in San Francisco could face penalties of up to $1,000 per unit per month.
- In response to the law’s passing, Richardson, Texas-based software provider RealPage announced that its customers can receive rent recommendations calculated without nonpublic information. It has eliminated the use of nonpublic data in all products offered in San Francisco and indicated it can do the same for other jurisdictions.
Dive Insight:
In the aftermath of ProPublica’s 2022 report on revenue management software, and the ensuing lawsuits filed against revenue management software providers RealPage and Yardi, many states and jurisdictions have introduced bills aimed at regulating or forbidding revenue management in rental housing.
San Francisco’s ban is the first in the nation to pass into law, and two more are in play at the municipal level. Philadelphia City Council member-at-large Nicholas O’Rourke announced similar legislation in a press conference on Sept. 26. On top of a ban, the ordinance would allow the city to file suit on behalf of residents, and establishes a penalty of $2,000 per violation per day. The ordinance has been put forth for final passage.
On Sept. 30, three San Jose, California, city council members proposed a ban on the use of revenue management software in the locality. Penalties for violations would include the “return of illegal profits” and up to $1,000 per violation. The ordinance was considered and deferred in an Oct. 2 meeting.
At the state level, Colorado Gov. Jared Polis approved a bill on May 17 that did not specifically target revenue management software, but instead requires developers of “high-risk AI systems” to use reasonable care to protect consumers from algorithmic discrimination. These include implementing risk management policies, conducting assessments and providing info on the systems to consumers and the attorney general, among other requirements. This law is set to take effect on Feb. 1, 2026.
With many state legislatures ending their sessions soon, the National Apartment Association has determined that a number of revenue management ban measures introduced at the state level across the country are unlikely to pass this year, according to a report by Joe Riter, NAA’s senior manager of public policy.
States whose assemblies introduced residential revenue management bans that did not pass in 2024 include Illinois, New Hampshire, California, Colorado, Connecticut, New York, Oklahoma and Rhode Island. The NAA anticipates future proposals in many of these areas and more besides.
