Landlords Who Use Software To Raise Rents May Be Fined, Say Hoboken And Jersey City

HOBOKEN, NJ — Landlords who increase rents based on a computer program rather than fair market factors could end up being fined if Hoboken's council passes a law against rent-setting software.

Jersey City became the first city in New Jersey to vote a similar ban last month.

The state of New Jersey and the federal government have cracked down recently on the software, which allows corporate landlords to increase rents on major buildings in one area according to an algorithm, giving people little choice if they need to find something cheaper in their area.

Back in April, New Jersey's attorney general announced a lawsuit against what he called a "cartel" of 10 landlords who he said were driving up rents in the Garden State. READ MORE: Cartel Of 10 Landlords Charge 'Unlivable' Rents, NJ Attorney General Says

And last August, the U.S. Justice Department said it was investigating a software company called RealPage for an "algorithmic pricing scheme that harms millions of American renters."

New Jersey already has laws saying tenants can fight an "unconscionable" rent increase in court, but this could require them to engage in a long and possibly stressful legal battle.

Corporate landlords who've bought up or built apartment complexes in places such as Hoboken have increased rents by more than 20 percent.

Jersey City Was First

Jersey City's council on May 21 voted to penalize landlords who use algorithmic rent-setting software. Hoboken will follow in that city's footsteps.

Hoboken already voted earlier this year voted to make it harder for landlords to raise rents more than 10 percent.

They plan to vote on introducing the new ordinance about rent-setting software this Wednesday. READ: Landlords Will Now Have To Justify 10 Percent Rent Increases In Hoboken

In a press release, the city said, "Hoboken has been directly affected by this alleged scheme as several properties [on the New Jersey list] 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."

Rents in Hoboken and Jersey City are now among the highest in the country, various surveys have noted. (See the below photo, spotted today.)

The proposed ordinance would make it unlawful for landlords renting residential dwelling units in Hoboken to engage in price-fixing through
algorithmic rent-fixing. The ordinance defines "algorithmic rent-fixing" as the use of software, algorithms, or data-sharing platforms to coordinate, recommend, or implement rental prices, lease terms, or occupancy levels among competing landlords.

This law would apply to all residential rental units in Hoboken, excluding medical, long-term care, or detention facilities.

Penalties for violations could include imprisonment for up to 90 days, fines of up to $20,000, or community service for up to 90 days.

“We are not going to stand by while algorithms manipulate rental prices and dictate whether Hoboken’s families can afford to live in our city,” said Mayor Ravi Bhalla. “This ordinance is a clear sign that we will not tolerate exploitative rent-setting practices in our community."

Tenants in Hudson County have cheered the recent developments.

Kevin Weller of Jersey City, the president of the Portside Towers East Tenant Association, said last month, "We're witnessing a dangerous cycle where algorithmic pricing extracts maximum rent from tenants, that money funds political campaigns, which protect developer interests, allowing them to extract even more ."

He added, "It's a perpetual motion machine where regular people's rent checks ultimately finance their own displacement."

Hoboken's ordinance will be introduced at the Wednesday City Council meeting, in City Council Chambers at 94 Washington St. at 7 p.m.

If you want to stream the meeting, watch on the city's Facebook page or you can watch on YouTube.

Assembly Candidates Weigh In

Meanwhile, Mayor Bhalla, who is running for Assembly to represent Hoboken and part of Jersey City, said Tuesday that he and runningmate Katie Brennan are calling on the state to outright ban the use of the software. In a release, the pair said that companies like RealPage have a role in the state's housing crisis.

“These algorithms allow corporate landlords to act like a cartel," Bhalla said Tuesday. "They collude to jack up rents and then pretend it’s just the market at work."

He added, "As mayor, I’ve taken on corporate landlords before, and now we’re working to pass the strongest ban on rent-setting algorithms in the country. But this is much bigger than Hoboken. In the Assembly, I’ll fight to ban rent-setting software statewide.”