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In February, California Senator Sasha Renée Pérez (D-Pasadena) introduced SB 52 — legislation to protect renters by regulating AI-driven rent-setting practices.

AI-driven rent recommendation tools have been used for over a decade, which has led lawmakers like Pérez to take action. Also known as the “End AI Rent Hikes Act,” SB 52 addresses the role AI plays in shaping rent prices in ways that may harm renters.

“California renters — like myself — are getting hit with unbearably high rents and now it’s even worse with this type of AI technology,” Pérez said in a news release announcing the bill.  “A marketplace works best when there is free and fair competition. SB 52 would prevent this technology from creating a monopoly-like environment where prices get manipulated and families suffer at the hands of hi-tech abuse.”

The integration of AI into property management has raised concerns in the context of California’s housing crisis. AI is used in property management to make rent-setting more efficient. By utilizing property management software such as RealPage and Yardi, landlords can analyze data from multiple sources to determine competitive rent prices.

They consider factors like market trends, competition and upcoming vacancies to suggest pricing strategies.

According to Robin Kane, multifamily specialist and managing director based in Northmarq’s Fresno office, if a landlord has several units that will soon become vacant, the AI could recommend lowering rents to avoid high vacancy rates. On the other hand, if only a few units are available, the AI might suggest raising rents due to the limited supply, allowing the landlord to capitalize on demand.

Kane added that tenants can also use AI to their advantage and make more informed rental decisions by researching competitive rental prices, finding available units and comparing rent data across multiple platforms.

“If you go to Apartments.com or any platform, you’re held hostage to whoever is paying the most money to get to the top of the search,” Kane said. “But if you use AI, you could curate a much better list of available apartments to your needs, geographically, price-wise and time-wise.”

According to a 2024 report by the White House Council of Economic Advisers, AI tools cost renters $3.8 billion in inflated rents. The report also links rising rents to increased housing instability, with a $100 increase in median rent correlating to a 9% increase in homelessness. Pérez’s bill hopes to protect renters from the potentially harmful impact of these technologies.

Advocacy groups such as TechEquity and the Western Center on Law and Poverty have supported the bill.

“Landlords are using AI to inflate rents above and beyond what is fair, hurting California renters who are just trying to get by. We need to update our laws to protect renters from this tech-powered exploitation so we can prevent it from making our already-dire housing crisis worse,” said Catherine Bracy, CEO of TechEquity.