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Canada to Investigate Potential Rent Hikes by Corporate Landlords Using AI Software

By  |  November 3, 2024
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In response to growing concerns over escalating rental prices, Canada’s Industry Minister, François-Philippe Champagne, has formally requested an investigation into possible rent-fixing practices among corporate landlords. This scrutiny centers on the use of YieldStar, an artificial intelligence-based pricing software developed by U.S. company RealPage, which has been criticized for potentially manipulating rent rates across Canadian housing markets. According to a statement from Champagne, the Competition Bureau of Canada is being urged to determine if this software is enabling illegal coordination among landlords, potentially pushing rental rates higher than market dynamics would naturally dictate.

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    Champagne’s appeal to the Competition Bureau follows an investigative report by CBC, which revealed that some corporate landlords may be using YieldStar to standardize and raise rental rates. The minister expressed his concerns in a letter to Matthew Boswell, Commissioner of the Competition Bureau, emphasizing the importance of preventing any form of market manipulation. “I want to draw your attention to recent revelations of possible price fixing in the rental market by landlords who use technologies like YieldStar,” Champagne stated, highlighting the need to examine whether such technologies undermine competitive pricing.

    This call for investigation marks the latest in a series of actions taken to address concerns around rental affordability in Canada. In September, Canada’s New Democratic Party (NDP) also urged the Competition Bureau to look into RealPage’s practices following a high-profile antitrust lawsuit in the United States. That lawsuit, filed by the U.S. Department of Justice, accuses RealPage of operating an unlawful scheme that could lead to widespread rent increases by coordinating pricing across multiple landlords. RealPage has denied any wrongdoing, according to statements made to both Canadian and U.S. media.

    The letter from Champagne underscores the Canadian government’s commitment to balancing technological innovation with consumer protection. “While we support the use of new technologies, we will not tolerate those that aim to exploit or disempower Canadians,” Champagne wrote, signaling that the government is prepared to act if such practices are found to disadvantage renters.

    In response to Champagne’s call, the Competition Bureau confirmed receipt of the letter and acknowledged the importance of a “thorough and complete examination of the facts,” according to a statement by Bureau representative John Power. Power affirmed that if evidence suggests any violation of the Competition Act, the Bureau will take necessary action to enforce the law.

    Concerns over housing affordability have been mounting across Canada, with recent data indicating that rental rates continue to rise. A report by Rentals.ca and Urbanation highlighted a 2.1% year-over-year increase in average rents, marking the lowest growth rate since late 2021. Nevertheless, upward pricing pressures persist, particularly in smaller Canadian cities where rental supply is limited, further fueling concerns that algorithmic pricing could exacerbate affordability issues in these areas.

    Source: CNBC