New York's Prohibition On Algorithmic Rental Pricing Programs Goes Into Effect

On December 15, 2025, Section 340-B of New York's General Business Law became law. Under the statute, it is illegal for owners and managers of residential property in New York state to utilize artificial intelligence (AI)-driven algorithmic programs to set rents or other terms of residential leases. The statute also makes it unlawful for anyone to facilitate an agreement among residential property owners or managers not to compete by licensing software that performs a coordinating function.¹

Background

The use of AI-driven algorithmic programs to set rents and other leasing terms for residential properties has been a concern across the United States for some time. Ordinances prohibiting the use of such programs have been enacted by various municipalities, including Philadelphia; Minneapolis; Portland, Oregon; San Francisco; and Santa Monica, California. These programs have also been in the crosshairs of the federal antitrust agencies. The Department of Justice (DOJ) recently announced a settlement of an action against a large provider of revenue management software and services for the multifamily housing industry. As alleged in the government's complaint, the provider's software relied on nonpublic, competitively sensitive information shared by landlords to set rental prices.² A few months earlier, the DOJ announced a settlement of its action against the largest landlord in the United States, which it accused along with other landlords of sharing competitively sensitive pricing data with the provider and discussing pricing strategies and other competitively sensitive topics for the provider's software with each other.³

The algorithmic software programs targeted by federal, state and local authorities typically collect pricing and other lease data and use AI to make recommendations to the users of the programs to set rental rates and other rental terms so as to optimize financial returns. When used by property owners and managers active in the same residential rental market, the programs are seen as promoting coordination on pricing and other lease terms, thereby stifling competition in the housing market. And in the words of the DOJ, "nowhere is competition more important than in making housing affordable again."

The New York Statute

Section 340-B consists of a set of definitions and two operative prohibitions. The statute defines an "algorithmic device" as a device, program or software that performs a coordinating function. "Coordinating function" is defined as:

1. collecting historical or contemporaneous prices, supply levels, or lease or rental contract termination and renewal dates of residential dwelling units from two or more residential rental property owners or managers [that are not commonly owned or managed];
   
2. analyzing or processing the information described in [the prior subparagraph] using a system, software, or process that uses computation, including by using that information to train an algorithm; and
   
3. recommending rental prices, lease renewal terms, ideal occupancy levels, or other lease terms and conditions to a residential rental property owner or manager.

The statute makes it unlawful:

• to facilitate an agreement between or among two or more residential rental property owners or managers to not compete with respect to residential rental dwelling units, including by operating or licensing a software, data analytics service, or algorithmic device that performs a coordinating function on behalf of or between and among such residential rental property owners or managers;
  
• for a residential rental property owner or manager to knowingly or with reckless disregard set or adjust rental prices, lease renewal terms, occupancy levels, or other lease terms and conditions in one or more of their residential rental properties based on recommendations from a software, data analytics service, or algorithmic device performing a coordinating function.

Application to Algorithms Using Public Data

Section 340-B speaks of "prices, supply levels, or lease or rental contract termination and renewal dates of residential dwelling units [obtained] from two or more residential rental property owners or managers." (emphasis added) The statute could be interpreted to apply only to data collected from property owners and managers that is nonpublic, but the statute contains no such express limitation. If the statute were to extend to the use of rental data that is publicly available, it would go beyond the actions of the DOJ against the use of algorithmic rental pricing software. Those actions were expressly limited to software that used nonpublic data, and the remedial terms of the settlements announced by the DOJ were specifically directed toward "competitors' nonpublic, competitively sensitive information."⁴

On December 11, 2025, President Donald Trump issued an executive order, "Ensuring a National Policy Framework for Artificial Intelligence," to limit state laws that regulate AI and create a "minimally burdensome national standard" for AI governance.⁵ The order does not likely target statutes such as Section 340-B, which seek to protect consumers from coordinated pricing activity by sellers and service providers. However, because Section 340-B may prohibit even algorithms that utilize only public data, the statute does not fully align with the administration's enforcement actions in the algorithmic rental pricing space. Some federal concern with the statute cannot be ruled out.

Conclusion

With Section 340-B having now become effective, landlords and property managers in New York are cautioned against using software programs that utilize data from multiple property owners to recommend pricing and other rental terms. It remains to be seen whether the New York statute will be interpreted to cover programs that use as their input data that is publicly available. Nothing of course prohibits a landlord or property manager from creating or using AI-driven software that utilizes data from its own operations or the properties otherwise under its control, so long as that data is not shared.

Footnotes

1 Separately, on November 10, 2025, New York's Algorithmic Pricing Disclosure Act took effect. That statute requires companies that use algorithmic pricing to display a disclosure notifying consumers that prices are set using their personal data. See "Attorney General James Warns New Yorkers About Algorithmic Pricing as New Law Takes Effect" (November 5, 2025); available at https://ag.ny.gov/press-release/2025/attorney-general-james-warns-new-yorkers-about-algorithmic-pricing-new-law-takes.

2 See "Justice Department Requires RealPage to End the Sharing of Competitively Sensitive Information and Alignment of Pricing Among Competitors" (November 24, 2025); available at https://www.justice.gov/opa/pr/justice-department-requires-realpage-end-sharing-competitively-sensitive-information-and.

3 See "Justice Department Reaches Proposed Settlement with Greystar, the Largest U.S. Landlord, to End Its Participation in Algorithmic Pricing Scheme" (August 8, 2025); available at https://www.justice.gov/opa/pr/justice-department-reaches-proposed-settlement-greystar-largest-us-landlord-end-its.

4 In a recently decided case in the Ninth U.S. Circuit Court of Appeals, Gibson v. Cendyn Group, LLC (9th Cir. August 15, 2025) (hearing en banc denied December 11, 2025), the court addressed similar concerns with the parallel use by hotel operators of AI-driven algorithmic pricing software to set rates in the Las Vegas hotel market. The court found no violation of the antitrust laws where the software used public data and there was no allegation of coordination among the hotel operators.

5 Available at https://www.whitehouse.gov/presidential-actions/2025/12/eliminating-state-law-obstruction-of-national-artificial-intelligence-policy/.

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