A4872

An Act concerning rental property pricing and supplementing P.L.1970, c.73 (C.56:9-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. New Jersey is in the midst of an affordable housing crisis, as demonstrated by rental housing industry data showing median rent for a three-bedroom apartment increasing by 35 percent in the State from 2021 through 2024 and a studio in a more urban environment such as Hoboken increasing by 61 percent in the same timeframe.

b. Data from the United States Census Bureau indicates that over 50 percent of renters in New Jersey are deemed “rent burdened,” which means an individual spends more than 30 percent of income on rent.

c. Recent national data indicates that landlords of residential rental housing use property management software to collude and raise residential rental housing prices, which may have contributed to recent increases in the State.

d. Landlords engaging with the software supply real-time prices and additional lease information to companies managing the software, who proceed to use algorithms to fix rental prices. As a result, competition decreases and typically rental prices increase.

e. A leading property management software company in the United States hinted at the outcome of using its software by stating on its website that it enables landlords to “outperform the market” by two to five percent, with a company executive publicly stating that the software could be responsible for rent increases of up to 14.5 percent.

f. New Jersey recognizes housing as a basic human need and endeavors to expand access to affordable housing.

2. As used in this act:

“Consciously parallel pricing coordination” means a tacit agreement between two or more rental property owners to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services.

“Coordinating function” means:

(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 rental property owners;

(2) analyzing or processing of the information described in paragraph (1) of this definition through use of a system, software, or process that uses computation, including by using the information to train an algorithm; and

(3) recommending rental prices, lease renewal terms, or ideal occupancy levels to a rental property owner.

“Coordinator” means any person who operates a software or data analytics service that performs a coordinating function for any rental property owner, including a rental property owner performing a coordinating function for their own benefit.

“Person” means, unless the context otherwise requires, any natural person or persons, or any corporation, partnership, company, trust, or association of persons.

“Residential dwelling unit” means any house, apartment, accessory unit, or other unit intended to be used as a primary residence in the State. “Residential dwelling unit” shall not include inpatient medical care, licensed long-term care, or detention or correctional facilities.

3. It shall be unlawful and a violation of the “New Jersey Antitrust Act,” P.L.1970, c.73 (C.56:9-1 et seq.) for:

a. a rental property owner, or any agent, representative, or subcontractor thereof, to subscribe to, contract with, or otherwise exchange any form of consideration in return for the use of services of a coordinator;

b. a coordinator to facilitate an agreement among rental property owners that restricts competition with respect to residential dwelling units, including by performing a coordinating function; or

c. two or more rental property owners to engage in consciously parallel pricing coordination.

4. Sections 7 through 17 of the “New Jersey Antitrust Act,” P.L.1970, c.73 (C.56:9-7 through 56:9-17) shall apply for a violation pursuant to section 3 of this act.

5. In a civil action filed pursuant to this act, a complaint:

a. plausibly pleads a violation of section 3 of the “New Jersey Antitrust Act,” P.L.1970, c.73 (C.56:9-3), if the complaint contains factual allegations demonstrating that the existence of a contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is among the realm of plausible possibilities; and

b. need not allege facts tending to exclude the possibility of independent action.

6. The Department of Law and Public Safety, in conjunction with the Department of Community Affairs, shall develop and undertake a public education program designed to inform the citizens of this State of the provisions of this act. A component of this program shall include information posted on the website of each department dedicated to the provisions of this act and the steps a consumer is to take if the consumer suspects a violation of this act.

7. The Attorney General and the Commissioner of Community Affairs, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations to effectuate the purposes of this act.

8. This act shall take effect on the first day of the fourth month next following the date of enactment.

STATEMENT

This bill prohibits the facilitation of agreements among rental property owners who restrict competition with respect to residential dwelling units. Under the bill, it is unlawful and a violation of the “New Jersey Antitrust Act” for (1) a rental property owner, or any agent, representative, or subcontractor thereof, to subscribe to, contract with, or otherwise exchange any form of consideration in return for the use of services of a coordinator; (2) a coordinator to facilitate an agreement among rental property owners that restricts competition with respect to residential dwelling units, including by performing a coordinating function; and (3) two or more rental property owners to engage in consciously parallel pricing coordination.

A “coordinator” is defined in the bill to mean any person who operates a software or data analytics service that performs a coordinating function for any rental property owner, including a rental property owner performing a coordinating function for their own benefit. “Coordinating function” is defined to mean (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 rental property owners; (2) analyzing or processing of the information described in paragraph (1) through use of a system, software, or process that uses computation, including by using the information to train an algorithm; and (3) recommending rental prices, lease renewal terms, or ideal occupancy levels to a rental property owner. “Consciously parallel pricing coordination” means a tacit agreement between two or more rental property owners to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services.

The bill further stipulates that current enforcement provisions of the New Jersey Antitrust Act will apply to violations committed pursuant to this bill. Additionally, in a civil action filed pursuant to the bill, a complaint is considered to plausibly plead a violation of the New Jersey Antitrust Act if the complaint (1) contains factual allegations demonstrating that the existence of a contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is among the realm of plausible possibilities; and (2) need not allege facts tending to exclude the possibility of independent action.

Lastly, the Department of Law and Public Safety, in conjunction with the Department of Community Affairs, is required to develop and undertake a public education program designed to inform the citizens of this State of the provisions of the bill. A component of this program is to include information posted on the website of each department dedicated to the provisions of the bill and the steps a consumer is to take if the consumer suspects a violation.