Minneapolis to Ban Algorithmic Rent-Setting Tools, Giving Tenants a New Right to Sue

The software that quietly helped landlords synchronize rents across much of the Twin Cities will soon be off-limits inside Minneapolis city limits.

Under a new ordinance taking effect March 1, 2026, landlords and property managers in Minneapolis will be barred from using certain algorithmic tools to set apartment rents or decide whether to keep units vacant. City officials say those tools, which crunch troves of private data from competing landlords, have pushed rents higher and encouraged what federal prosecutors have called “a modern way to violate a century-old law.”

The measure, Ordinance No. 2025-010, makes Minneapolis one of the first U.S. cities in the Midwest to directly prohibit “rent-setting algorithms” that use nonpublic competitor data. It also gives tenants the right to sue landlords who use the banned tools, potentially opening a new front in the legal fight over how artificial intelligence is reshaping housing markets.

“This is about stopping contagious, destructive practices in our housing market,” Council Member Robin Wonsley, the ordinance’s lead author, said when the City Council approved the measure last year. “These algorithms create housing instability and have no place in an equitable and affordable housing market.”

The ordinance passed the City Council unanimously on March 27, 2025, after a public hearing and months of staff work. Mayor Jacob Frey allowed it to become law without his signature, a step that signaled neither an endorsement nor a veto.

How the ban works

The law amends Minneapolis’ Housing Maintenance Code to add a new section titled “Prohibition on use of rent-setting algorithms.” It states that an “owner or operator may not use an algorithmic device when setting rents or occupancy levels for dwelling units.”

That definition is narrowly drawn. An “algorithmic device” is described as any tool that uses one or more algorithms to process “non-public competitor data concerning local or statewide rents or occupancy levels” and then advises a landlord either on the rent that can be charged for a particular unit or whether to leave that unit empty.

“Non-public competitor data” includes actual rent prices, occupancy rates, lease start and end dates, and similar information, whether or not it is anonymized. It also does not matter whether the data is obtained directly from a competitor or through an intermediary that competes in the same or a related rental market.

In practice, the definition is aimed squarely at revenue-management products like those sold by RealPage Inc., a Texas-based software company at the center of federal antitrust litigation. Those tools ingest internal data from multiple landlords, analyze supply, demand, and occupancy, and push out pricing recommendations meant to maximize revenue across an entire portfolio.

The ordinance does not ban all software or data-driven analysis. It specifically exempts:

• Reports that publish existing rental data in an aggregated way without recommending future rents or occupancy levels.
• Tools that landlords or developers use to comply with rent or income limits under local, state, or federal affordable-housing programs.

Landlords remain free to set rents manually or to use software based only on publicly available information, such as online listings or government rent indices, so long as it does not rely on competitors’ confidential data or output individualized pricing and vacancy recommendations.

A new right to sue

Beyond the prohibition itself, Minneapolis built a private enforcement mechanism into the law.

“To the extent permitted by law, tenants may bring a civil action in district court to recover compensatory damages and reasonable attorney’s fees and costs” from an owner or operator who violates the ban, the ordinance states.

Housing lawyers say that language opens the door for individual lawsuits and potential class actions once the law takes effect next year. Because it sits inside the Housing Maintenance Code, a violation could also interact with the city’s rental licensing and inspection system, though the ordinance does not create separate municipal fines.

How tenants will prove that a landlord used a prohibited algorithm remains an open question. Information about pricing-software contracts and data feeds typically resides with property managers and vendors, and would likely surface only through subpoenas or court-ordered discovery.

City staff acknowledged those challenges as they recommended a long runway. The effective date — nearly a year after passage — was chosen to give landlords time to review contracts, switch products, or reconfigure systems before any private lawsuits could be filed.

Rooted in federal antitrust action

The local law did not emerge in a vacuum. It was drafted as federal and private legal challenges mounted against RealPage and some of the country’s largest landlords.

In August 2024, the U.S. Department of Justice and attorneys general from eight states, including Minnesota, sued RealPage in federal court. The complaint accuses the company of using its software to orchestrate an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software.”

“By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law,” the Justice Department said when it announced the case.

Minneapolis officials were briefed by the Minnesota Attorney General’s Office on that lawsuit and on how pricing algorithms function, according to city records. A year earlier, the city’s Housing Advisory Committee had recommended considering a ban on third-party rent-setting software, describing the products as “facilitation of rental housing cartels.”

City staff also cited an analysis from the White House Council of Economic Advisers that estimated rental pricing algorithms increased U.S. renters’ costs by $3.8 billion in 2023, or roughly 4%. For renters living in units managed by such tools in the Twin Cities, the city’s staff report said the extra cost averaged about $324 per year compared with similar apartments not priced by algorithm.

RealPage has denied wrongdoing and says its products are legal and promote more efficient, competitive markets. In court filings in a separate case challenging a similar ordinance in Berkeley, California, the company has argued that bans on its software improperly restrict “speech in the form of advice and recommendations” to clients.

No such lawsuit has been filed against Minneapolis to date, but legal analysts expect constitutional and pre-emption arguments to surface if the ordinance leads to enforcement actions or tenant suits.

A renter-majority city pushes back on AI

Minneapolis’ move comes as it stands out nationally for relatively muted rent growth. Between January 2019 and December 2023, median rents in the city fell by about 3.5%, even as comparable cities saw increases of more than 20%, according to data analyzed by the Federal Reserve Bank of Minneapolis.

Economists have largely credited the city’s earlier zoning overhaul, known as the Minneapolis 2040 Plan, which allowed more housing types in more neighborhoods and helped boost construction. Local officials are now layering a pricing-focused regulation atop that supply-side approach.

The equity stakes are large in a city where most residents rent. About 52% of Minneapolis households are renters, and renters are disproportionately people of color. City racial equity data show that 84% of American Indian residents, 79% of Black residents, and 66% of Hispanic residents rent, compared with 43% of white residents. Nearly half of renters are considered cost-burdened, paying more than 30% of their income for housing.

The ordinance’s racial equity analysis argued that algorithms “artificially drive up rent” and “disproportionately extract wealth from renters of color,” and said banning them is part of building “an equitable city.”

Student renters were among those pushing the council to act. Many live near the University of Minnesota, in a tight submarket dominated by large, professionally managed complexes.

“Students are constrained to live in certain areas,” said Siya Shelar, director of local affairs for the university’s undergraduate student government. “Once one apartment complex is using rent algorithms, every other apartment complex is going to be like, ‘Cool, we’re going to use it too,’ and it inflates the market excessively.”

Council Member Jeremiah Ellison, a co-author of the ordinance, said landlords should be figuring out how to charge enough rent to provide “dignified, adequate service” — not how to “use high-tech collusion to gut every single dime they can out of a renter.”

Landlord groups and industry-aligned law firms have warned that the ordinance is broad and may sweep in tools that are less obviously collusive. Some skeptics argue that without continued construction, restricting software will do little to ease rent burdens and could create a confusing patchwork of local rules.

Part of a broader crackdown

Minneapolis is not alone. In the past year, Berkeley, San Francisco, Philadelphia, San Diego, and Seattle have all adopted laws limiting or prohibiting algorithmic rent-setting tools that rely on nonpublic competitor data. California and New York have since passed statewide restrictions based on similar concepts. Washington state lawmakers are debating a bill that targets rent-pricing software that collects and analyzes data from multiple landlords.

Together with ongoing federal litigation and private class-action cases, those measures are reshaping a once-obscure corner of the property-technology industry. RealPage and its competitors are exploring product changes in jurisdictions with bans, according to legal advisories, including modes that would rely only on public data and stop short of explicit rent recommendations.

For Minneapolis, the test will come after March 1, 2026. City officials have said they will look at trends in rent growth and vacancy as indicators of whether the ordinance is working, though no formal evaluation plan has been announced.

For tenants, much will depend on awareness of the new rules and the ability to bring cases. Local legal aid organizations and tenant groups are weighing how to monitor compliance in a market where, by one city estimate, roughly one in seven rental units in the Twin Cities has been managed by pricing algorithms.

In the meantime, the invisible software that helped landlords coordinate their pricing is on notice. In a city where most residents rent, Minneapolis is betting that treating certain algorithms like a cartel will tilt the housing market, even slightly, back toward people on the other side of the lease.