Kamala Harris Wants to Ban Landlords from Raising Rents Using Algorithms

“Some corporate landlords are colluding to artificially inflate rental prices, often using algorithms and pricing software,” Harris said during a recent speech on economic policy. “It’s anti-competitive and it raises costs.”

That’s because housing costs have skyrocketed in recent years, largely due to a severe housing shortage. Rents across the U.S. have risen about 19% since 2019, and more renters than ever before are rent-burdened, meaning they spend more than 30% of their income on rent and utilities. American voters are very concerned about this. A recent survey found that 83% of Democrats and 68% of Republicans believe the lack of affordable housing is a serious problem.

Rent setting algorithms are subject to legal control

Companies like RealPage have attracted the attention of law enforcement after investigative reports about their practices. RealPage, a Texas-based company, sells software called YieldStar that recommends rental prices to its clients—landlords and property managers—based on nonpublic information it collects about the real estate market.

Attorneys general in Arizona and Washington, D.C., have filed lawsuits against the company, alleging it illegally conspired with its customers to set rent prices above competitive levels. And on Friday, The New York Times reported that the U.S. Department of Justice is suing RealPage, alleging anticompetitive, collusive conduct.

“They don’t charge what the market can bear, they control the market,” Arizona Attorney General Kris Mayes said of landlords who use RealPage. She found that 70% of rental homes in Phoenix and 50% in Tucson are owned by companies that use RealPage. In D.C., the attorney general accused RealPage and its clients of running a “district-wide housing cartel” that controlled more than 30% 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 law professor at the University of Tennessee and a former antitrust prosecutor for the Justice Department, told Business Insider last year. “That’s usually a telltale sign of collusion.”

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

Solving the housing shortage problem

In addition to attacking landlords with pricing algorithms, Harris has backed another piece of legislation aimed at cracking down on Wall Street investors who buy homes in bulk. But that would only solve the housing crisis on the margin.

While rent-setting algorithms may be driving up prices in some markets, the broader affordability crisis is due to much larger forces of supply and demand. But it’s politically popular to prosecute Wall Street investors and landlords who engage in predatory behavior. Republican lawmakers, including J.D. Vance, have backed tougher regulations on investor buyouts.

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

There’s a risk that regulating landlords, both in terms of rent and home purchases, could backfire by limiting investment in homes and thus hurting supply. “If we really tightened private capital, less capital would go into this space, less capital would go into investing in new homes,” Ben Metcalf, managing director of UC Berkeley’s Terner Center for Housing Innovation, told Business Insider.

Redfin 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 exploited and displaced in the marketplace. It can be harder for the average voter to understand how supply and demand affect the cost of housing, so Harris is targeting a clear opponent in addition to addressing the underlying housing shortage, she said. A large part of Harris’ housing plan focuses on increasing the supply of housing, with a promise to build 3 million homes over four years.

“Harris acknowledges that average people feel the housing market is broken,” Fairweather told Business Insider. “He addresses a lot of the specific concerns of first-time homebuyers who feel they’re being squeezed out by investors and their landlords are raising rents.”

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