No investigation into possibility landlords are using AI to hike rents as MP’s motion rebuffed

Ottawa needs to investigate the possibility that Canadian renters are being ripped off by landlords using AI software to sidestep competition while setting rents, according to Port Moody-Coquitlam MP Bonita Zarrillo.

“Canadians deserve to know if their landlords are illegally price-fixing,” Zarrillo said at the Standing Committee on Human Resources on Tuesday.

Zarrillo’s motion followed a civil antitrust lawsuit filed by the U.S. Justice Department. The suit alleged software company RealPage took part in an: “unlawful scheme to decrease competition among landlords,” which “harms millions of Americans.”

According to the lawsuit, the software collects information about apartment rental rates and other competitively sensitive private information. The software then generates recommended rental rates for 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,” the U.S. Justice Department release stated.

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

She submitted a motion asking the committee to study the role of financialized landlords and rising costs in the rental market, as well as the pervasiveness of algorithmic pricing tools.

Zarrillo also asked to invite the CEOs of major real estate investment firms such as Starlight Investments, Dream Unlimited, Boardwalk Real Estate Investment Trust, and Main Street Equity to appear before committee.

Her motion was rebuffed as the Liberal and Conservative committee members voted against resuming the conversation. Zarrillo is the only NDP representative on the committee.

Later that day, Zarrillo raised the issue during question period.

“These rich corporate landlords are using artificial intelligence software to potentially collude and jack up rents,” she said. “The housing minister needs to tell his members to stop blocking the presence of these CEOs in committee.”

Housing Minister Sean Fraser touted investments the federal government has made in affordable housing.

“On this side of the house I can tell you it’s my colleagues who tell me to increase investments to build more affordable housing,” he said. “If the NDP want to turn their mind to solutions, I’ll listen. Until then I’m going to continue acting.”

Zarrillo had previously asked Prime Minister Justin Trudeau why he was protecting the companies fueling the housing crisis.

Trudeau maintained the Liberals were working constructively to deliver housing for Canadians.

‘Absurd numbers’

It’s “very misguided” to blame investors for the housing shortage, according to Simon Fraser University professor Andrey Pavlov.

Pavlov, who specializes in risk management for real estate, underscored the massive need for new housing – as well as the massive cost of building that housing.

Without considering infrastructure and the price of land, the construction cost of a single unit is about $500,000, he said.

“You pick any number [of units] that you think we think you should build, and you multiply by $500,000, and we get absurd numbers,” he said. “There is nobody who can build that in B.C. without a lot of private investment.”

With more uncertainty in the market – due to new rules around development, for instance – companies will look for a higher return on investment to make that risk worthwhile.

“Which means we’re not only building fewer units, we’re building units we need the least,” Pavlov said, noting the high return from luxury condos.

The province should welcome anyone willing to build housing, according to Pavlov.

“We’re building less, vacancy is down, and rents are up,” he said. “If that doesn’t convince you we’re on the wrong track, I don’t know what would.”