Illinois Lawmakers Target Rent Algorithm Use Amid Soaring Prices

As rental prices continue to climb across Illinois, both tenants and property managers are feeling the pressure. In response to the rising costs and a growing concern over algorithm-driven pricing, lawmakers have introduced new legislation that seeks to curb the use of computerized rent-setting systems by landlords.

According to a statement from Rep. Lilian Jiménez (D-Chicago), the bill would require landlords to set rental prices based on local market conditions rather than relying on algorithms. Jiménez emphasized that housing is a basic human right, and rent prices should be determined by human judgment, not technology. “What we’re seeing is a problem of higher and higher rents across the states,” she stated. “We, as a state, have to be really careful how we allow rent algorithms to determine what our rent should be when we know that people need rent and people need housing.”

The bill follows a significant legal challenge against major national landlords. Illinois Attorney General Kwame Raoul has joined a multi-state lawsuit targeting six major landlords accused of using algorithms to manipulate rent prices across the country. The lawsuit alleges that RealPage, a software company that provides rent management services, played a central role in this practice. RealPage allegedly collected sensitive data, including lease details and occupancy rates, from various property managers and processed it through algorithms that recommended rent prices.

Per a statement from the Department of Justice, the data shared by property managers was often done so through informal channels, such as emails and phone calls, or through a user platform created by RealPage. Landlords using this software were reportedly compelled to accept rent price recommendations through an “auto-accept” feature, which made it difficult for property managers to ignore the software’s suggestions.

Jiménez’s proposed legislation does not aim to ban the use of technology in property management but rather seeks to eliminate the mandate to rely on algorithms for setting rent. “This is just prohibiting the requirement. So what these companies are doing is requiring them to use their rent algorithm,” she explained.

The debate surrounding rent algorithms has sparked a conversation about the ethical implications of technology in pricing, especially as the cost of living continues to rise. Critics argue that such systems can stifle competition and disproportionately affect renters, while proponents claim they offer a more efficient way to adjust prices based on market trends.

RealPage, which is named in the DOJ’s lawsuit, has denied any involvement in anti-competitive behavior. The company asserts that it merely provides tools to help property managers optimize their rent pricing strategies. Greystar Real Estate Partners LLC, one of the defendants in the case, also rejected the claims of unlawful practices.

Source: WCIA