Hoboken Bans Landlords From Using Software To 'Fix' Rent Increases

HOBOKEN, NJ — After corporate landlords raised Hoboken rents as much as 25 percent in one year, the city moved to crack down on increases in a number of ways. This week, the City Council voted 9-0 to ban landlords from using rent-setting software that bases the amount on an algorithm rather than the market.

The U.S. Justice Department, and the state of New Jersey, have been investigating the county's largest corporate landlords for using software that may raise all the rents in an area at once, giving homeowners few options if they can't afford the unanticipated increase.

New Jersey has already had a longtime law in its books saying tenants may withhold the amount of an increase that's "unreasonable and unconscionable," but they must their case if taken to eviction court. In addition, Hoboken's rent control laws limit increases in many buildings to 5 percent or less. Cartel Of 10 Landlords Charge 'Unlivable' Rents, NJ Attorney General Says

But not all buildings are rent controlled, and not everyone wants to withhold rent and wind up in eviction court.

Earlier this year, Hoboken's City Council passed a law saying that all landlords who want to increase rents more than 10 percent must justify the increase to the city. READ MORE: Landlords Will Now Have To Justify 10 Percent Rent Increases In Hoboken

And at their Wednesday meeting, the council voted to outlaw use of algorithmic rent-setting software in the rental housing market.

Jersey City had passed a similar law in June. READ MORE: Landlords Who Use Software To Raise Rents May Be Fined, Says Jersey City

The New Law

The new rule goes into effect 20 days from its passage.

"It will now be illegal for landlords renting residential units in Hoboken to engage in price-fixing through algorithmic rent-fixing," said the city of Hoboken this week, "meaning they can no longer use software, algorithms, or data-sharing platforms to coordinate, recommend, or implement rental prices, lease terms, or occupancy levels among competing landlords."

“Every Hoboken resident deserves access to a fair and competitive housing market, free from manipulation by secret algorithms or corporate collusion,” said Mayor Ravi Bhalla. “This new law sends a clear message: we will not tolerate artificial rent inflation that puts profit over people. By protecting transparency and restoring market integrity, we are standing up for renters and preserving the character of our community."

How To Report An Increase

Any tenant, regardless of the age of type of unit, can talk to the city's tenant advocate for free if they believe their rent increase or other charges are unfair.

"This new legislation specifically targets the use of algorithmic software for price-fixing," said city spokeswoman Marilyn Baer, "which is a form of rent manipulation. By outlawing this practice, the city is working to ensure that rent increases remain driven by market forces, not artificial algorithms, in an effort to restore fairness and transparency to the residential rental market. If a resident reports a rent increase that appears to be the result of algorithmic price-fixing and manipulation to the Division of Housing, this landlord could be subject to fines of up to $2,000, community service up to 90 days, or imprisonment up to 90 days."

If the unit is subject to rent control — which applies mostly (but not only) to older units — they can contact the city's Rent Control Office, Baer said.

To talk to the tenant advocate, use the link in this story.

'That Isn't A Free Market'

Kevin Weller, a Jersey City tenant and an advocate for local renters, said at the meeting, "My neighbors were hit with increases of over 30 percent. The excuse? We were told things like … the software ‘took empathy out of the equation’ and that the local office no longer had the power to do anything about the rental rates. The message was essentially: ‘The software made us do it. Pay up, or we will replace you.’ That isn’t a free market; it’s a shakedown. The New Jersey Attorney General’s lawsuit states that a key part of this scheme is to deliberately keep units vacant to create artificial scarcity, all while sharing non-public data."

He added, "In 2023, I was the first and, I believe, the only New Jersey renter to file a national lawsuit against what my legal team described as a price-fixing cartel ... You can decide that this scheme has no place in Hoboken."

The new legislation comes after an April lawsuit filed by the New Jersey Attorney General against RealPage, Inc. and 10 of the state’s largest landlords, including AvalonBay Communities and The Bozzuto Group, both of which operate large residential properties in Hoboken, the city noted.

"Hoboken has been directly affected by this alleged scheme as several properties are managed by defendant companies and tenants at these properties have reported substantial rent hikes dating back to 2023, including increases of 20 to 30 percent," the city said.

Patch has covered a number of these controversies, including here.

To learn more about the newly adopted legislation, click here.