MODEL BILLS

Fair Competition in Residential Rent Act

Summary: Rental rates are going up in part because of anti-competitive practices by landlords who use algorithmic rent-setting software. The Fair Competition in Residential Rent Act prohibits residential rental property owners from engaging in rent-fixing.

Based on NJ AB 4872 (2024)

SECTION 1. SHORT TITLE

This Act shall be called the “Fair Competition in Residential Rent Act.”

SECTION 2. FINDINGS AND PURPOSE

(A) FINDINGS—The legislature/commission/council finds that:

1. [State/locality] is plagued by an affordable housing crisis, as demonstrated by rental housing industry data showing median rent for a three-bedroom apartment increasing by XX percent from 2021 through 2024 and a one-bedroom increasing by XX percent in the same timeframe.

2. Data from the United States Census Bureau indicates that over XX percent of renters in [STATE] are deemed “rent burdened,” which means an individual spends more than 30 percent of income on rent.

3. Recent national data indicates that landlords of residential rental housing use property management software to collude and raise residential rental housing prices, which has contributed to recent rent increases.

4. This software enables landlords, who should be competitors, to share confidential, competitively sensitive information in order to align their rents and create an artificial scarcity that ensures rent prices remain high and keep climbing.

5. A leading property management software company in the United States stated on its website that it enables landlords to “outperform the market” by two to five percent, with a company executive publicly stating that the software could be responsible for rent increases of up to 14.5 percent.

6. It is essential to ensure that rents are set by fair competition rather than by collusion.

(B) PURPOSE—This law is enacted to protect fair market competition in the residential rental market.

SECTION 3. FAIR COMPETITION IN RESIDENTIAL RENT

After section XXX, the following new section XXX shall be inserted:

(A) DEFINITIONS—In this section:

1. “Consciously parallel pricing coordination” means a tacit agreement between two or more rental property owners to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services.

2. “Coordinating function” means:

(a) collecting historical or contemporaneous prices, supply levels, or lease or rental contract termination and renewal dates of residential dwelling units from two or more rental property owners;

(b) analyzing or processing of the information described in paragraph (1) of this definition through use of a system, software, or process that uses computation, including by using the information to train an algorithm; and

3. “Coordinator” means any person who operates a software or data analytics service that performs a coordinating function for any rental property owner, including a rental property owner performing a coordinating function for their own benefit.

4. “Residential dwelling unit” means any house, apartment, accessory unit, or other unit intended to be used as a primary residence in the State. “Residential dwelling unit” does not include inpatient medical care, licensed long-term care, or detention or correctional facilities.

(B) PROHIBITIONS

1. It shall be unlawful and a violation of the [cite existing law against anticompetitive practices] for:

(a) a rental property owner, or any agent, representative, or subcontractor thereof, to subscribe to, contract with, or otherwise exchange any form of consideration in return for the use of services of a coordinator;

(b) a coordinator to facilitate an agreement among rental property owners that restricts competition with respect to residential dwelling units, including by performing a coordinating function; or

2. The [Department of Consumer Affairs] shall develop and undertake a public education program designed to inform the citizens of this State of the provisions of this section. A component of this program shall include information posted on the website of each department involved in enforcing the provisions of this section and the steps a consumer is to take if the consumer suspects a violation.

(C) ENFORCEMENT

1. The [Department of Consumer Affairs] shall adopt rules and regulations to effectuate the purposes of this section.

2. An aggrieved person may file a civil action pursuant to this section wherein the complaint contains factual allegations demonstrating that the existence of a contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is among the realm of plausible possibilities and it need not allege facts tending to exclude the possibility of independent action.

SECTION 4. EFFECTIVE DATE

This law shall become effective on July 1, 20XX.