If you have a rental property in San Diego, you may have heard about the ban on rent-setting software, but how well do you understand it? It's important to comprehend why the city council adopted the San Diego ordinance.
Key Takeaways:
- San Diego passed the Anti-Competitive Automated Rent Price-Fixing Prohibition Ordinance in June 2025, banning landlords from using rent-setting software that relies on nonpublic competitor data.
- Rent-setting software like RealPage’s YieldStar and others has been accused of enabling algorithmic price-fixing, leading to inflated rents and reduced competition in the housing market.
- The ban came after investigations and lawsuits by the Department of Justice and state attorneys general against RealPage for alleged antitrust violations.
- Landlords in San Diego must now determine rental prices through traditional market research, while tenants are expected to benefit from fairer pricing and fewer coordinated rent hikes.
- San Diego joined other cities, including San Francisco, Minneapolis, Philadelphia, Jersey City, and Hoboken, that have also banned rent-setting algorithms to protect housing affordability.
What is Algorithmic Price-Fixing?
It is the circumstance where software tools are used to collect nonpublic competitor data, such as rent prices and occupancy rates, to automatically set rents. Many point out that it is "price-fixing" as landlords can use similar products from the same software companies, which Councilmember Sean Elo-Rivera referred to as a "modern-day price-fixing service."
It was initially used to make pricing recommendations without comprehensive market analysis. However, landlords can and have used it as a way to reduce competition, independently setting high rent prices so the algorithms use it as a baseline. As a result, tenants are forced to pay inflated rental rates as their options become limited.
The Anti-Competitive Automated Rent Price-Fixing Prohibition Ordinance
Councilman Elo-Rivera introduced the ordinance, which was widely accepted by the majority, apart from one, as Councilmember Raul Campillo cast the lone dissenting vote. The main goal was to ban software companies from selling or licensing algorithmic pricing software,
The California Apartment Association issued a news release on San Diego's rent-setting algorithm ban soon after it was adopted by the City Council in May 2025.
The ordinance became active by June, effectively prohibiting landlords from using software that uses nonpublic competitor data to recommend rental rates and occupancy levels.
How The Rent-Setting Algorithm Issue Was Raised
Before the ordinance was passed to ban landlords from using AI tools that comb through nonpublic data, published reports say that 22% of San Diego County multifamily landlords used tools like RealPage. The company's associate general counsel, Mike Semko, even defended its purpose during a council meeting.
The Department of Justice, as well as several state attorneys general, sued Texas-based firm RealPage, stating that they were violating antitrust laws. The DOJ's lawsuit eventually led to the ordinance that bans rent-setting algorithms in San Diego, California in 2025, which prevents landlords from making organized rent hikes.
City Attorney Heather Ferbert stated that blocking software that sets algorithmic rent will make for fairer competition and restore balance to the housing market for San Diegans.
As of right now, at least seven cities, including Minneapolis, San Francisco, Philadelphia, Jersey City, and Hoboken, have the same ban, with San Francisco being the first to ban revenue management software.
How Does It Affect San Diego Landlords and Tenants?
Landlords
With the ordinance banning software that accesses private data and causes anticompetitive effects, San Diego landlords and property managers will have to analyze the right rent pricing the traditional way, which is through meticulous research of the rental market. It is the same concept that other cities have accepted and advocated for.
Tenants
Since San Diego landlords can no longer rig the system using data and algorithms "at the expense of working families," as Elo-River's office argued, it will be easier for renters to find affordable housing. Rent increases from competitors will no longer be used as a baseline for setting rental rates as well.
How To Set The Right Rent Price
Finding the right rent price for your investment property is not simple, but also not as complex. Here are steps that you can take to achieve competitive pricing without rent-setting tools.
- Research the local market and look into comparable rentals, online platforms, and the vacancy rates in the area.
- Calculate your operating costs to ensure that your overall rental income can cover expenses like mortgage, property taxes, and property management fees. Also account for variable expenses like maintenance, utilities, repairs, and capital expenditures.
- Factor in your property features, such as size, layout, amenities, and its condition. Renters are willing to pay a higher rental rate when your property has better quality than your competitors.
- Consider the market demand and peak seasons. You can typically price higher when demand is high and adjust when the demand decreases.
- Always be aware of the legal restrictions that affect rent pricing. If you're unsure, consult rental industry experts to remain legally compliant.
Rent-Setting FAQs
What were the companies that created rent-setting software?
- The most prominent companies were RealPage, Yardi Systems, Entrata, MRI Software, and ResMan. The DOJ filed a complaint against RealPage, specifically, leading to the ordinance that banned landlords from using it in San Diego.
Who introduced the rent-setting algorithm ban in San Diego?
- Councilmember Sean Elo-Rivera first introduced the ordinance, which was passed into law and took effect in June 2025. The eventual ban was also pushed further as the Department of Justice filed a complaint against a firm that created such products, RealPage.
Are there landlords exempt from the algorithmic pricing software ban?
- No. All landlords who own any property type are legally obligated to abide by the ordinance. Although RealPage argued that it violates free speech by preventing it from advising customers based on data-driven results, the new law was still passed.
Which cities have the same rent-fixing algorithm ban?
- The cities that also follow the same law are Minneapolis, San Francisco, Philadelphia, Jersey City, and Hoboken, allowing renters to find more affordable housing.
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