Brown Calls on FTC to Review Whether Rental Pricing Algorithms Violate the Law

WASHINGTON D.C. – Sen. Sherrod Brown (D-OH), Chair of the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Lina Khan, Chair of the Federal Trade Commission (FTC), to urge the FTC to review property owners’ and landlords’ use of price optimization software like RealPage’s YieldStar and AI Revenue Management to set rents. The letter follows reports that the software’s algorithm inflated rents and suppressed competition in the housing market.

“According to recent reports, the collection and use of rent data in price optimization software is allowing for anticompetitive and potentially unlawful collusion among competitors at the expense of consumers,” wrote Brown. “Renters should have the power to negotiate fairly priced housing, free from illicit collusion and deceptive pricing techniques. Recent reporting raises serious concerns about collusion in the rental market, and the FTC should review whether rent setting algorithms that analyze rent prices through the use of competitors’ private data, such as YieldStar, violate antitrust laws.”

Brown has long fought to protect consumers and working families from bad actors in the housing market. In August, he chaired a hearing to better understand the challenges renters are facing in the housing market. In February, he held a hearing and a listening session with tenants to hear about the growing role of institutional investors and private equity landlords in the rental market.  

A copy of the letter is available HERE.

For our members, this is something we will keep you posted on in the future.

The National Apartment Association has also weighed in on Revenue Management Systems:

• At the end of the day, rental housing is a business – an essential business. Without it, tens of millions of Americans would not have a home.
  • Housing also costs money to develop, operate and maintain.
  • As with all businesses, it must be financially viable or housing for 44 million Americans is in peril.
• Part of business – in any industry – is embracing technology like algorithms.
  • The industry’s financial viability in part depends on evolving to meet market needs, including the use of new technologies and algorithms
• Algorithms provide data-driven insights into supply and demand and, while they can increase rent, the reverse is also true – if the market cannot support rent levels, asking rents will drop.
• Our nation has an established housing market within which we are working. There are housing providers and there are renters, and outside forces need to stop pitting them against each other.
• The goal isn’t to drive renters out of housing – empty buildings don’t help residents, and they certainly don’t help housing providers who still need to pay mandatory expenses when units are empty (taxes, insurance, maintenance, payroll).
• Without the rental housing industry – including rental housing owners and operators of all portfolio sizes and technological capabilities – we would be in a far worse affordability crisis.
  • There’s an undeniable need for rental housing – we currently have a shortage and demand will only continue increasing to the tune of 4.3 million new units by 2035.
  • The industry must remain viable to maintain the current stock and build new homes.
• We can’t lose sight of the bigger picture here – an unprecedented housing affordability crisis, spurred by a critical lack of all types of housing at all price points.
  • NAA has been aggressively advocating for responsible solutions since the onset of the crisis, namely:
    • Revitalizing rental subsidy programs to support low- and moderate-income renters (short-term)
    • Removing restrictive barriers at all levels of government to apartment development to boost construction of much-needed housing (long-term)

Put plainly, if we lose sight of what it will take to improve affordability long-term – building more housing – the crisis won’t get any better.