End AI Rent Hikes Act – SB 52

AI shouldn’t raise our rents. Introducing the End AI Rent Hikes Act.

We all deserve a safe and stable home, regardless of our circumstances. When we all have a stable place to call home, our communities and California thrive.

But this is not attainable for all—California is the most expensive state to rent in the country, requiring an average hourly wage of $47.38 to afford a 2-bedroom apartment. Californians rent at a higher rate than the vast majority of other states; we come third in the highest ratio of renter-occupied homes in the nation at a whopping 44.2%. More than half of California renters are rent-burdened, meaning more than 30% of our incomes go toward rent. Simply put, the rent in California is too damn high. 

Our housing crisis isn’t new. What is new, however, is the way landlords are using AI to inflate rents above and beyond what is fair. Landlords and other real estate business owners are harnessing algorithms to set rent increases in lock-step with each other based on data from thousands of sources. These AI-backed rent-pricing algorithms turn competitors into collaborators; if enough landlords agree to set rental prices above the market, California renters have little choice but to pay it. 

We must take action to catch up to the speed and scale at which tech enables rent-fixing and create clear protections in California for renters just trying to get by.

That’s why State Senator Sasha Renée Pérez authored SB 52, the End AI Rent Hikes Act, to ban algorithms used by landlords to hike rents. Taking this step is an indisputable choice to protect Californians from worsening housing instability and homelessness. SB 52 makes it clear that using algorithms to collude and inflate rental prices is illegal in California. What’s more, SB 52 creates clear mechanisms for accountability and enforcement when landlords use these algorithms illegally.

The End AI Rent Hikes Act is sponsored by TechEquity, Western Center on Law and Poverty, and the Alliance of Californians for Community Empowerment (ACCE).

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What SB 52 will do

The End AI Rent Hikes Act will ban algorithms used to hike rents. SB 52 clarifies that using algorithms to collude and inflate rental prices is illegal in California and creates strong mechanisms for accountability and enforcement when landlords use these algorithms illegally. For the nitty-gritty details, you can check out the full bill language here.

SB 52 does three main things:

Landlords are using AI to inflate rents above and beyond what is fair, hurting California renters who are just trying to get by. We need to update our laws to protect renters from this tech-powered exploitation so we can prevent it from making our already-dire housing crisis worse.

Catherine Bracy Founder and CEO of TechEquity

The End AI Rent Hikes Act is sponsored by TechEquity, Western Center on Law and Poverty, and the Alliance of Californians for Community Empowerment (ACCE).

How AI rent fixing is hurting renters today

Algorithmic rent pricing is already embedded in our housing market across the country, and it’s costing renters at least $70 more a month in buildings that use these algorithms. President Biden’s Council of Economic Advisors (CEA) found that this effectively costs renters $3.8 billion annually. RealPage, the largest company supplying these algorithmic pricing tools, controls 80% of the commercial revenue management market. It’s estimated that their tools enable landlords to increase rents 3-7% above what is considered competitive levels.

These are conservative estimates. A recent study showed that Blackstone, the country’s largest landlord and a client of RealPage, raised rents in California 50% higher than the market average. In San Diego in particular, Blackstone’s rent increases were nearly double the market increase for apartments in the county—perhaps contributing to the $99 average increase CEA attributed to RealPage in San Diego alone.

This goes beyond covering the costs of managing housing—landlords are manipulating the housing market to maximize profit at the direct expense of people just trying to get by. By collectively working to manipulate the rental market through abusing technology, landlords distorting the market to their advantage are working with an unfair advantage. This tech-powered exploitation is hiking rents, pricing families out of their homes, and exacerbating California’s dire affordability crisis. 

According to research from the U.S. Government Accountability Office, a $100 increase in median rent is associated with a 9% increase in homelessness. By exploiting renters by charging far past the market average with AI-powered tools, landlords are exploding California’s homelessness crisis.