Hoboken Takes Aim At 'Unscrupulous' Software Helping Landlords Hike Rents

HOBOKEN, NJ — Following in the footsteps of Jersey City, Hoboken's City Council on Wednesday evening passed a resolution asking the state to ban software that some say has resulted in landlords in driving up rents in certain areas at once, giving tenants no place to go if they can't afford a steep increase.

The Justice Department is currently investigating the possibility of "collusion" among corporate landlords nationwide — including landlords that happen to own apartment buildings in Hoboken and Jersey City. Investigative news stories determined that some of them were using software to set rent prices, instead of the local market.

The measure may be coming too late for a group of tenants who were advised by the city last year to fight their 25 percent or higher rent increases, and are now uncertain about where their legal battles will go next. But the measure may help protect them and others from future steep increases.

What's The Law In New Jersey?

In the last two years, the rents in both Hoboken and Jersey City have become among the highest in the nation. But they may not be lawful, regardless of whether the building falls under local rent control.

Rental buildings in New Jersey are currently governed both by local and state laws about increases.

Most older buildings in Hoboken are subject to the 1973 Rent Control Ordinance, which restricts the amount of annual increases to the Cost of Living Adjustment, with several exceptions. And regardless of whether a building falls under local rent control, all rentals are subject to New Jersey laws saying that all landlords may only give increases that are "reasonable and conscionable." (Read more about that here.)

The standard of what's "conscionable" is murky, and it often falls to tenants to plead their case in eviction court. Last year, the city helped three tenants file a "test case" to clarify the matter, but dropped it, and has not responded to Patch's questions about whether they will file something similar to help other tenants. READ MORE: Hoboken Filed 'Test Case' To Determine Which Rents Are 'Unconscionable'

Newest Council Measure

The City Council did not ban local landlords from using the software, but voted on Wednesday to ask the state to do so.

A press release from the sponsors of the measure, Councilman Phil Cohen and Councilwoman Emily Jabbour, said, "One leading property technology company has boasted that its rent-pricing software enables landlords to 'outperform the market' by 2-5 percent. These practices are unacceptable and contribute to the growing financial strain on Hoboken residents, making it harder and harder for Hoboken families to stay in their homes and continue living in the Mile Square City."

Here is the release on their resolution:

The Hoboken City Council yesterday unanimously called on State legislators to pass legislation banning the use of an algorithmic system by two or more landlords in order to recommend or set the price and supply of rented residential dwelling units. Recent national investigations and lawsuits have revealed troubling practices among property management companies that use software to unfairly inflate rental prices.

According to reports, property managers share real-time, non-public price and lease information with property technology companies, which in turn use algorithms to recommend rents for large portions of the market, effectively suppressing competition and driving up rental prices. One leading property technology company has boasted that its rent-pricing software enables landlords to "outperform the market" by 2-5 percent. These practices are unacceptable and contribute to the growing financial strain on Hoboken residents, making it harder and harder for Hoboken families to stay in their homes and continue living in the Mile Square City.

Hoboken Councilman Phil Cohen sponsored this resolution and stated: “I am committed to shedding light on these unscrupulous practices and working to ensure that all Hoboken residents and workers have access to safe and affordable housing.” Cohen added, “The Hoboken City Council is calling on New Jersey legislators to pass legislation banning the use of these algorithmic systems that are driving tenants out of their homes.”

Council Member Emily Jabbour who co-sponsored this legislation added: “It is clear that use of this predatory software is leading to the artificial inflation of rent levels in Hoboken. I am glad to see Hoboken’s City Council has a united voice with our colleagues in Jersey City to ask the State Legislature to ban its use to prevent exploitation of tenants.”

Hoboken’s City Council joins Jersey City’s governing body in calling for the New Jersey Legislature to take decisive action after Jersey City adopted similar legislation introduced by Jersey City Council Member James Solomon. A link to the Hoboken City Council resolution is here.

Got a rent problem in Jersey City or Hoboken? Let Patch know what's going on.

More Information On Local Rents And Rent Laws

• Other cities around North Jersey have come up with creative ways to help tenants. Here are five tenant protections they've passed recently.
• Jersey City recently passed a "right to counsel" law to give tenants under a certain income limit a free representative for eviction hearings.
• Other New Jersey officials are looking for ways to help tenants as well. One state assemblyman introduced a law requiring landlords to explain the reason for their increase.
• In Hoboken last year, the city helped three tenants file a lawsuit against their building owner, Avalon Bay, to determine the standard of "unconscionability" — but that case has been dropped for now. READ MORE: Hoboken Drops "Test Case" Over "Unconscionable" Rents.
  
• Here is the state law about unconscionable rent increases: