Introduction
It should not come as a surprise that there has been an increase in the use of artificial intelligence (AI) in the housing market, with many landlords turning to algorithmic pricing models to set rental rates. These models analyze large amounts of data, such as competitor pricing, occupancy rates, and lease terms, to determine rental prices. Though this will help landlords increase profits, it also raises concerns about price inflation and housing affordability.
This concern is nationwide. In Virginia, HB 2047 proposes similar restrictions, requiring landlords to disclose their use of algorithmic pricing tools. New Jersey’s AB 4872 aims to prevent property owners from using nonpublic data to set rent prices or lease renewal terms. In response to these concerns and following the lead of other states, Senators Love (D-16) and Hester (D-9) in Maryland introduced SB 609 to prohibit landlords from using algorithmic tools that rely on nonpublic competitor data to set rent prices.
Reasoning Behind the Bill
SB 609 seeks to prevent AI-driven rent-setting tools from contributing to unfair price inflation. These algorithmic systems allow landlords to aggregate nonpublic competitor data, potentially leading to higher rents based on proprietary formulas rather than actual supply and demand. Most likely, the impact of this would disproportionately inpact affect low- to moderate-income renters in Maryland.
Additionally, SB 609 addresses concerns about consumer protection. By classifying the use of AI-driven pricing models as an unfair, abusive, or deceptive trade practice under the Maryland Consumer Protection Act, the bill empowers the state to take action against landlords who manipulate rent prices in ways that harm tenants.
What the Bill Does
SB 609 explicitly prohibits landlords from using AI and algorithmic devices that incorporate nonpublic competitor data to determine rent prices. It defines “algorithmic devices” as systems that use algorithms to calculate rental data and provide landlords with pricing recommendations. The bill makes exceptions for publicly available rental market reports and affordable housing program calculations.
Violations of the ban would be classified as an unfair, abusive, or deceptive trade practice under Maryland law. Landlords who violate the law could face penalties and enforcement actions under the Maryland Consumer Protection Act. The Maryland Attorney General’s Office, specifically its Consumer Protection Division, would oversee enforcement.
Changes to Existing Law
SB 609 amends Maryland’s Commercial Law under Article 13-301 to add violations of this provision as an unfair trade practice. It also adds Section 8-220 of the Real Property Article into the bill to explicitly prohibit the use of algorithmic devices in setting rental prices. These amendments would assist consumer protection authorities to take action against landlords who fail to comply.
Support and Opposition
Supporters of the bill include tenant advocacy groups, housing rights organizations, and lawmakers focused on affordability. In general, they argue that algorithmic rent-setting disproportionately impacts lower-income renters and worsens the housing crisis. By restricting these tools, they belief that the bill would create a fairer rental market, increase transparency in pricing, and protect tenants from price manipulation.
Opponents, including landlord associations and technology firms, argue that algorithmic pricing improves efficiency and allows landlords to make informed business decisions. Some claim that restricting this technology could discourage investment in Maryland’s rental market, potentially leading to unintended economic consequences.
Implementation Timeline and Legislative Process
SB 609 was introduced on January 24 and assigned to the Judicial Proceedings Committee, chaired by Senator Will Smith, Jr. (D-20) and vice-chaired by Senator Jeffrey Waldstreicher (D-18). If the bill passes through committee deliberations and subsequent votes in the Maryland Senate and House of Delegates, it will be enacted into law. Should it be approved before the Maryland session ends in April, the bill would take effect on October 1, 2025, applying to lease agreements made after that date.
Who Will Be Affected?
SB 609 will directly impact landlords who use or plan to use algorithmic devices to determine rental prices. Current and future tenants, especially those in high-demand rental markets like Baltimore and the Washington, D.C., suburbs of Prince George’s and Montgomery Counties, may see more stable and predictable rent prices. Property management companies and technology firms developing these tools may also face restrictions on their operations in Maryland.
Moving Forward: The Future of AI in Housing
As SB 609 moves through the legislative process, it will be important to track how various stakeholders influence the debate. The outcome could set a precedent for other states grappling with similar issues in the rental market. We will continue to provide updates as the bill advances through the committee stages.
Comments