Investigation to target landlords collaborating on AI-enabled rent hikes

Three weeks after her concerns were essentially dismissed, Port Moody-Coquitlam MP Bonita Zarrillo is getting her investigation.

There’s a chance Canadian are being hit with rent hikes as landlords fix prices using artificial intelligence software, Zarrillo claimed earlier this month, raising the issue during question period in the House of Commons.

At the time, Zarrillo’s request to question the CEOs of major real estate investment firms was rebuffed, as Housing Minister Sean Fraser underscored the importance of upping the investment in affordable housing, adding: “If the NDP want to turn their mind to solutions, I’ll listen.”

It was a different story on Thursday, as Minister of Innovation Francois-Philippe Champagne pledged to write to the Competition Bureau asking for an inquiry into what he called a “completely unacceptable” practise.

The issue received widespread attention in August when the U.S. Justice Department filed a civil antitrust lawsuit, alleging software company RealPage took part in an: “unlawful scheme to decrease competition among landlords,” which “harms millions of Americans.”

According to the lawsuit, landlords have been sharing “competitively sensitive information” about rental rates and lease terms with RealPage. The company uses that information to train its algorithmic pricing software, which in turn recommends rental rates to the landlords who buy the software.

“In a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms, and other dimensions of apartment leasing,” stated a release from the U.S. Justice Department.

The release also quotes internal documents and sworn testimony from RealPage which describe the software as: “driving every possible opportunity to increase price.”

Responding to CBC, a RealPage spokesperson called the allegations “devoid of merit,” adding the company would defend themselves against the accusations.

Speaking in the House of Commons on Tuesday, Zarrillo accused the Liberals of making “gentlemen’s agreements,” while Canadians struggle with skyrocketing rents.

“Yet the Liberals and the Conservatives have stood by greedy corporate landlords by refusing to investigate,” she said.

“Mr. Speaker, I wish the colleague just had heard my answer. We are going to launch an investigation. That’s exactly what I said,” Champagne responded. “The NDP should celebrate what we’ve done.”

Champagne also noted recent changes to Canada’s Competition Act.

The changes, which were finalized in June, are intended to target anti-competitive agreements between businesses by allowing fines as well as orders to restore competition.

Previously, the Competition Bureau could only challenge ongoing anti-competitive agreements or agreements that were likely to harm competition in the future. The revised act allow the bureau to take civil action on anti-competitive agreements going back three years.

There could be as many as 13 companies in Canada using that software, Zarrillo previously said in committee.

Half the paycheque

In 2021, more than 4,000 Tri-Cities renters spent at least half their paycheque to cover rent and utilities, according to a report released last year by the Canadian Rental Housing Index.

Paying less than 30 percent of your income on rent is considered affordable.

On average, Coquitlam renters paid $1,604 a month in 2021, an approximately 31 percent increase from 2016.

Port Moody rents were the highest in the Tri-Cities at $1,718, an increase of 29 percent compared to 2016.

Average rents in Port Coquitlam rose by $389 to an average of $1,536 – or nearly 34 percent – compared to 2016.