New Jersey Enacts Restrictions on Algorithmic Rent-Setting Tools

New Jersey Governor Mikie Sherrill signed the FAIR Act into law on Monday, establishing new state-level restrictions on the use of automated rent-setting algorithms. The legislation, which is scheduled to take effect next summer, prohibits landlords from incorporating sensitive metrics—such as occupancy rates, lease termination dates, and housing supply data—into pricing software. Additionally, the law bars property owners from coordinating to artificially inflate rents.

Governor Sherrill characterized the use of these digital tools as a form of algorithmic collusion that disadvantages tenants. "These tools put competing landlords on the same team against renters," Sherrill stated during the signing. She emphasized that the measure is a key component of her administration's broader effort to address the state's housing affordability crisis.

The software company RealPage, a primary target of the new regulations, indicated it would adjust its products to maintain compliance. However, company spokesperson Patrick Mendoza criticized the move, arguing that the focus should remain on increasing housing supply rather than restricting analytical software.

The legislation arrives amid a broader legal battle. New Jersey currently has an active federal lawsuit against RealPage and several large landlords, alleging that their use of rent-setting software constitutes illegal price-fixing. State officials, including those in the Attorney General’s office, have expressed confidence that the new law will serve as a vital tool in these ongoing enforcement efforts.

Local leaders, including those from Jersey City and Hoboken, have welcomed the state-level intervention. Jersey City Mayor James Solomon noted that while local governments previously attempted to investigate these practices, they often lacked the necessary resources to bring formal charges.

Similar legislation in New York is currently facing a legal challenge from RealPage, which argues that such restrictions infringe upon First Amendment rights. When asked about potential litigation in New Jersey, Governor Sherrill expressed confidence that the FAIR Act was drafted with sufficient precision to withstand constitutional scrutiny while effectively curbing anti-competitive behavior in the rental market.