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Santa Monica Bans Algorithmic Rent-Setting Tools Amid Housing Crisis

By  |  July 3, 2025

The City of Santa Monica has enacted a groundbreaking ordinance prohibiting the use and sale of algorithmic rental pricing software, becoming one of the first municipalities in the country to implement such a ban.

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    The ordinance, passed with minimal public discussion during a recent City Council meeting, aims to curb the influence of data-driven rent-setting platforms that city officials say contribute to inflated rental costs. According to a statement from the city, the legislation is part of a broader effort to address housing affordability in the wake of recent regional disasters.

    The council’s action comes as Santa Monica continues to face heightened demand for rental housing following the devastating Los Angeles County wildfires in January, which displaced thousands of residents across the region. Per a statement from city leaders, the ordinance is intended to protect renters from exploitative practices during a period of intense market pressure.

    The legislation specifically targets software such as RealPage’s YieldStar, which utilizes confidential data from nearby properties to recommend rent increases and optimize occupancy rates. According to a statement from the city, officials believe such systems operate as a form of digital price-fixing, effectively undermining market competition and artificially inflating rents across communities.

    Related: Seattle Considers Ban on Rent-Setting Algorithms Amid Collusion Allegations

    Santa Monica’s ordinance not only prohibits the use and distribution of these tools but also empowers tenants with new legal protections. Under the new rules, renters may cite violations of the ban as a defense in eviction cases, and both the city and affected individuals may pursue civil enforcement actions.

    This local action aligns with findings from the White House Council of Economic Advisors, which reports that algorithmic pricing tools cost renters an average of $70 more per month nationwide. In the Los Angeles metropolitan area, the added burden averages $34 monthly. Per the council’s findings, even those renting from landlords who do not use the software can face increased rents due to pressure created by rising prices elsewhere.

    Santa Monica joins a growing list of cities—including San Francisco, Berkeley, Philadelphia, and Minneapolis—that have taken similar steps to outlaw algorithmic rent-setting technologies. Other municipalities, including San Diego and Seattle, are currently considering comparable measures.

    According to a statement by Mayor Pro Tem Caroline Torosis, the ordinance is a proactive measure to prevent price manipulation and ensure equitable access to housing, especially following the wildfires. She acknowledged the city attorney’s office and the consumer protection unit for their efforts in advancing the ordinance.

    Source: smdp