San Francisco 1st in U.S. to ban rental-price software

SAN FRANCISCO - San Francisco is now the first city in the nation to ban the use of a type of software that large landlords use to set rental prices.

The San Francisco Supervisors voted unanimously on the issue Tuesday night. 

This new law focuses on a very specific type of software, commonly used by large property owners, and companies that own large apartment complexes to determine the cost of rent or whether to rent out their units at all to keep supply low and demand high.

The software allows landlords to input information about their properties, and then the program's algorithm compiles that data to suggest a rental price that is favorable to the property owner. 

San Francisco city leaders say as many as 70 percent of large property owners and apartment companies use this software and that it amounts to price collusion, which ends up inflating the cost of housing.

Supervisor Aaron Peskin, who is also running for mayor, introduced the ordinance to make the use of that kind of program illegal.

"In the old days, collusion between competitors happened in a smoke-filled backroom," Peskin said at the board meeting. He added that the ban aims to curb a "new form of price fixing," and in doing so lower rents and bring more apartments onto the market.

Some of the companies that make this price-setting software are RealPage and Yardi system. 

RealPage already has a four-page document on its website defending itself from these claims. 

Part of it says: "While real page revenue management software assists housing providers in analyzing their properties' data and determining how their supply compares to demand for each floor plan, the software offers only recommendations."

Real Page and Yardi have been the target of several lawsuits for price-fixing by other cities and states in the United States, including Washington, D.C., and by the attorney general of Arizona, and a class-action lawsuit based out of Tennessee.

If property management companies and landlords use this type of program in San Francisco, they could face up to $1,000 in fines for each violation.