Kamala Harris wants to ban landlords from raising rents through algorithms

“Some corporate landlords collude with each other to set artificially high rental prices, often using algorithms and price-fixing software to do so,” Harris said during a recent speech on economic policy. “It’s anti-competitive and raises costs.”

This comes as housing costs have skyrocketed in recent years, largely due to a severe housing shortage. U.S. rents have risen about 19% since 2019, and more renters than ever are rent-burdened, meaning they spend more than 30% of their income on rent and utilities. American voters are extremely concerned about this. A recent poll found that 83 percent of Democrats and 68 percent of Republicans believe the lack of affordable housing is a significant problem.

Rent-setting algorithms face legal scrutiny

Companies like RealPage have drawn close attention from law enforcement following investigative reporting into their practices. RealPage, a Texas company, sells software called YieldStar that recommends apartment rental prices to its clients — landlords and property managers — based on nonpublic information it gathers about a particular real estate market.

The attorneys general of Arizona and Washington, DC, both filed lawsuits against the company, alleging that it illegally colluded with its customers to set rent prices above competitive levels. And on Friday, The New York Times reported that the US Department of Justice sued RealPage, alleging anti-competitive and collusive conduct.

“They don’t charge what the market can bear, they control the market,” Arizona AG Kris Mayes said of landlords using RealPage. She found that 70 percent of the rental homes in Phoenix and 50 percent in Tuscon are owned by companies that use RealPage. In DC, the attorney general accused RealPage and its clients of operating a “district-wide housing cartel” that controlled more than 30 percent of the city’s multifamily units.

“They’re promising higher prices by a small but significant amount, even though occupancy is down,” Maurice Stucke, a University of Tennessee law professor and former DOJ antitrust division prosecutor, told Business Insider last year. “That’s usually the telltale sign of collusion.”

A spokesman for RealPage did not immediately respond to a request for comment.

Addressing the housing shortage

In addition to targeting landlords using pricing algorithms, Harris supported another piece of legislation designed to crack down on Wall Street investors buying homes in bulk. But these efforts would address the housing crisis only marginally.

While rent-setting algorithms may be driving up prices in some markets, the much larger forces of supply and demand are to blame for the broader affordability crisis. But it is politically popular to go after Wall Street investors and owners who have engaged in predatory behavior. Republican lawmakers, including JD Vance, have supported cracking down on homebuyer investors.

“There’s a kind of belief that big landlords have more power than they actually have,” Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institute, told Business Insider. But, she added, trying to prevent these practices isn’t a bad idea. “The question is, what do you do at the end of the investigation and there’s actually some action that will help consumers.”

There is a risk that the regulation of landlords, either in how they set rents or in terms of the homes they buy, could backfire by reducing investment in housing and therefore affecting supply. “If you actually really got rid of private equity, there would be less capital in this space, less capital in investment in new homes,” Ben Metcalf, managing director of UC Berkeley’s Terner Center for Housing Innovation, told Business . Insider.

Redfin’s chief economist Daryl Fairweather argued that Harris is prioritizing regulating predatory landlord behavior as a way to attract first-time homebuyers and renters who feel taken advantage of and outbid by the market. It can be harder for the average voter to understand how supply and demand affects the cost of their home, so Harris is targeting a clear opponent in addition to addressing the underlying problem of the housing shortage, she said. A big part of Harris’ housing plan is focused on increasing housing supply, with a pledge to build 3 million homes over four years.

“Harris recognizes how ordinary people feel the housing market is broken,” Fairweather told Business Insider. “It addresses many of the specific concerns of first-time homebuyers who feel they are being outbid by investors and their landlords are jacking up the rent.”

Will your landlord raise the rent significantly? Are you willing to share your story? Contact this reporter at [email protected].