Jersey City Takes Aim At Landlords 'Colluding' On Rent Hikes

JERSEY CITY, NJ — A Jersey City councilman is taking action after ongoing investigations suggest that corporate landlords are using software to drive up rents, giving tenants few alternatives if the amounts rise at once.

The Justice Department is currently investigating the possibility of "collusion" among several corporate landlords nationwide, including landlords that happen to own apartment buildings in Jersey City and Hoboken.

In the last two years, the rents in both cities have become among the highest in the nation, but they may not be lawful for a number of reasons. (Read prior Patch reporting on that issue here.)

This week, Downtown Jersey City Councilman James Solomon partnered with a local union, 32BJ-SEIU — which represents more than 175,000 local service workers — to introduce a resolution to "ban rent-setting algorithms being used to drive up housing costs."

Solomon's resolution had the support of other council members and was passed unanimously at a City Council meeting Wednesday night, June 26.

Local And State Laws Govern Increases

Rental buildings in New Jersey are currently governed both by local and state laws about increases.

Older buildings in Jersey City are subject to the city's rent control ordinance, which restricts the amount of annual increases. And by New Jersey law, all landlords may only give increases that are "reasonable and conscionable." (Read more about that here.) However, the standard of what's "conscionable" is murky, and it often falls to tenants to plead their case in eviction court. In addition, there have been recent debates over newer buildings that may fall under rent control as well.

In both Hoboken and Jersey City, tenants have been telling local media that unexpected increases of 20 percent or more have threatened to uproot their families. READ MORE: Tenants Of Portside Towers Face Rent Control Hearing

READ MORE: Hoboken Filed 'Test Case' To Determine Which Rents Are 'Unconscionable'

Investigative news stories have determined that some corporate landlords across the country were using software to set rent prices, instead of the market. This means that a tenant who can't afford the rent increase in one building may have no alternatives, as other nearby buildings were also following the algorithm.

“It’s no secret that rents across the country, especially right here in Jersey City, are at untenable highs,” said Councilmember Solomon, the lead sponsor of the resolution, this week. “But to know that this housing crisis was in part artificially created—that landlords and developers are
essentially colluding to jack up rent prices for everyone else—is a slap in the face. If rent-setting software has the power to rig the housing market for the wealthiest property managers in the country, then we as elected officials have a duty to take that power away and level the playing field for working families."

“The skyrocketing rents and market distortions caused by algorithmic rent setting by proptech companies like RealPage and Yardi would be a cause for alarm in the best of circumstances,” said Ana Maria Hill, NJ State Director for 32BJ SEIU. “That this is happening amid a housing crisis not just in Jersey City but across New Jersey and, indeed, the country, is intolerable."

Jersey City Council President Joyce Watterman said, “The misuse of algorithmic systems by large landlords, as revealed by the FBI's investigation into RealPage, has resulted in unfair rent increases and market distortions. This resolution is a necessary step to address these issues and protect
our residents from further exploitation."

"The 32BJ Union consistently champions fair housing practices and worker rights," said Councilmember-at-Large Amy DeGise. "Their partnership with the council on this critical issue underscores their commitment to combating market distortions that harm our communities."

"Being born and raised in Jersey City, I have witnessed firsthand the negative impact that high rents and lack of affordable housing have had on our community,”said Councilmember-at-Large Daniel Rivera. “While Jersey City and New Jersey as a whole have been suffering from a cost-of-living crisis, the increase of high rents has particularly affected most of our low- and moderate-income residents which makes it difficult to promote long-term economic stability across our city."

“The rise of algorithms that prioritize profits that are detached from reality is not only exacerbating a housing crisis, but if left unchecked, will wreak havoc on families, their surrounding communities, and regional economics," said council member Yousef Saleh.

Other Information

Kevin Weller, a tenant in Portside Towers, says he believes the algorithms are "a Jersey City crisis. Through our research and outreach, we've found many buildings potentially violating rent control laws using similar tactics." He also says the mayor, who is running for governor, should better enforce the rent control laws.

Weller noted that the SEIU union has created a survey for Jersey City renters to fill out: Access it here.

Meanwhile, other cities around North Jersey have come up with creative ways to help tenants. Here are five tenant protections they've passed recently.

Got a rent problem in Jersey City or Hoboken? Let Patch know what's going on.

More Information

• Jersey City recently passed a "right to counsel" law to give tenants under a certain income limit a free representative for eviction hearings.
• Other officials are looking for ways to help tenants as well. One state assemblyman introduced a law requiring landlords to explain the reason for their increase.
• In Hoboken, the city helped three tenants file a lawsuit against their building owner, Avalon Bay, to determine the standard of "unconscionability" — but that case has been dropped for now. READ MORE: Hoboken Drops "Test Case" Over "Unconscionable" Rents.
  
• Here is the state law about unconscionable rent increases: