Rents prices continue to skyrocket in Connecticut and U.S. Sen. Richard Blumenthal said software is part of the problem.
He said landlords are able to control markets by using software that allows them to see how far they can raise their rents without losing tenants.
“These kinds of price-fixing cartels ought to be banned,” Blumenthal (D-Conn.) said during a press conference Tuesday alongside Greater Hartford Legal Aid.
Online real estate brokerage Redfin said rents for all unit types in Connecticut was $2,050 in February, up 18.4% from a year earlier.
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While housing prices continue to soar across the country, Blumenthal said companies like RealPage and Yardi are allowing landlords and property management companies to bump up rents more aggressively.
Price fixing laws prevent companies from talking about pricing and agreeing on a certain amount.
Blumenthal said these programs have created a loophole by allowing landlords and property management companies to share data through a third party and, essentially, agree on pricing.
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“Rather than having the landlords come together in a smoke-filled room over whisky and cigars, the algorithms perform that service automatically,” Blumenthal said.
Blumenthal is a co-sponsor of the Preventing Algorithmic Collusion Act, which seeks to make it illegal to do just that.
The two companies are also part of a class action lawsuit against their software. Yardi Systems did not respond directly to Blumenthal’s legislation, but denied claims it was engaging in price fixing.
“It is entirely permissible to make independent pricing decisions by using pen and paper -- or a calculator or spreadsheet -- to track rent trends, review one’s own data and consider publicly available rents of competing properties,” the company said in a statement.
Advocates say the software has impacts across the rental market, not just with property owners who use it.
Other landlords will eventually learn how much they can charge, too, forcing tenants to make difficult decisions about whether to move.
“It's their home, it’s where their friends, family and community is, and because of these continually rising rents, these artificially rising rents, they have to move,” GHLA staff attorney Thomas Freeman said.
