Washington state targets rent-pricing algorithms
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Washington state lawmakers may ban landlords from using software to coordinate and help set rent prices, after federal officials recently sued over the practice.
Why it matters: The Washington legislation is aimed at services like RealPage, a software company that the Department of Justice and several states have accused of conspiring with landlords to inflate rents.
- The government's antitrust lawsuit alleges RealPage feeds its algorithm sensitive, nonpublic data from landlords, which competing landlords then use to maximize their profits at renters' expense.
Zoom in: An estimated 800,000 leases in Washington were priced using RealPage's revenue management software between 2017 and 2024, according to the state attorney general's office.
- A 2022 ProPublica investigation found that 70% of apartments in Seattle's Belltown neighborhood were managed by the same 10 firms, all of which used RealPage.
The latest: Senate Bill 5469 would ban the use of software that collects and analyzes data from multiple landlords, then uses that information to recommend rental prices or lease terms to two or more landlords.
- The measure cleared the Washington state Senate on a 29-19 vote earlier this month and is awaiting action in the House.
What they're saying: State Sen. Jesse Salomon (D-Shoreline), the bill's lead sponsor, told a state House panel last week that the idea is to prevent "market collusion."
- "We know that rental housing needs to remain competitive and fair for renters," Salomon said during an earlier public hearing in January.
The other side: Mike Semko, vice president and associate general counsel for RealPage, told House committee members that the bill overreaches and "essentially bans math."
- Passing the measure would "send a signal to housing providers that Washington is not open for business," Semko said.
- Semko added that RealPage's clients often don't follow the company's pricing suggestions.
- "We do not set rents — our customers set the rents," Semko said.
By the numbers: An analysis last year from the White House Council of Economic Advisers found that the use of software like RealPage cost U.S. renters $3.8 billion in added rental costs in 2023.
Between the lines: While Washington originally was part of the federal lawsuit against RealPage, the state dropped its claim last month.
- Mike Faulk, a spokesperson for the state attorney general's office, declined to explain why, but told Axios the state can refile a lawsuit "if that is in the best interest of protecting Washingtonians."
- The attorney general's office has not taken a position on Salomon's legislation, Faulk said.
What's next: The measure passed out of a state House committee Wednesday, but still must win approval on the House floor.
- The legislative session is scheduled to run through April 27.