In recent years, apartment owners and property managers have increasingly relied on algorithmic platforms to set rental prices across their portfolios, drawing the ire of critics who say the practice facilitates price-fixing. A proposed class-action lawsuit in Canada, launched in December 2024, alleges that more than a dozen landlords conspired to artificially inflate rents using the YieldStar rent recommendation software. Although it’s still early in the litigation process, the plaintiffs are seeking financial compensation for tenants who may have overpaid rent dating back as far as 2009.

The scrutiny around algorithmic rent-setting here in Canada coincides with similar activity in the U.S., where nine states and the U.S. Department of Justice recently filed a lawsuit against RealPage Inc., the Texas-based company responsible for YieldStar. The litigants allege that several large U.S. landlords have been using the platform’s algorithm to artificially keep rents high and share potentially private, sensitive information. On May 6, 2025, Colorado lawmakers passed a bill banning landlords from using AI platforms to set rent prices, claiming the practice cost renters in Denver an additional $136 per month in 2023; several U.S. cities, including San Francisco, Philadelphia, Minneapolis, and Berkeley, have also banned algorithmic rent-setting tools.

Joe Hoffer, Partner at Cohen Highley LLP, suggests that landlords found guilty of unlawfully using the AI rent-setting software in Canada may face more severe consequences than their U.S. counterparts given the “activist nature” of Canadian courts.

“There will likely be more tolerance in the U.S. for the use of AI and algorithms in pricing rent than here in Canada,” he said. “However, it should be recognized that landlords and property managers have always used a basic appraisal methodology to determine market rents, including surveying rental rates at comparable buildings. It would be difficult to argue that the use of AI itself for determining rents should be illegal; rather, it is the subscription to a platform where confidential rent information is exchanged that is most likely to produce an adverse outcome for landlords.”

In February, the Competition Bureau of Canada announced it had commenced an investigation into the potential unlawful use of AI-driven pricing algorithms to manipulate rental markets. As of yet, no legal action has been taken but officials have promised to act if they find evidence of anti-competitive behaviour.

“Protecting competition in the real estate industry is a priority for the Bureau, and we are committed to taking appropriate action whenever we find evidence of conduct that contravenes the Competition Act,” said Geneviève Chassé, Communications Advisor, Public Affairs and Outreach Directorate, Competition Bureau. “I can confirm that the Bureau’s investigation into algorithmic pricing in the Canadian real estate rental market is ongoing. The Bureau must conduct a thorough and complete examination of the facts regarding any issue before reaching any conclusion as to whether the Competition Act has been contravened. While the Bureau endeavours to complete its investigations as expeditiously as possible, it would be inappropriate to speculate as to when the Bureau will reach any conclusion.”

Reportedly, several prominent Canadian property managers identified in the lawsuit  have since discontinued using the AI-tool, or in some cases, instructed their third-party property managers to return to more traditional methods. The list includes GWL Realty Advisers, Tricon Residential, Choice Property Real Estate, CAPREIT, and Dream Unlimited among others.

The polarizing benefits of AI

The controversy surrounding Artificial Intelligence—and rent-setting algorithms in particular—highlights the growing intersection between technology and real estate. While AI-driven pricing tools offer numerous advantages for rental property owners, drawing from vast amounts of data to advise on pricing strategies, concerns about fairness and competition have put them under major scrutiny. Critics argue that when multiple landlords in a market use the same software, the algorithms can lead to artificially inflated rents, thereby diminishing competition. Allegedly, some platforms such as YieldStar use proprietary data from landlords and property managers to coordinate pricing decisions, resulting in a form of “algorithmic collusion.”

As the legal storm continues, Hoffer advises Canadian apartment owners to stay informed about the latest developments in both Canada and the U.S.

“If the lawsuits succeed, landlords who have used algorithmic pricing tools could face financial penalties and be required to compensate tenants for overpaid rent,” he said. “Additionally, regulatory changes could restrict or ban the use of AI-driven rent-setting platforms in the future.”

Lastly, he recommends that landlords review their pricing strategies to ensure they comply with competition laws; they may also want to consult legal experts and monitor updates from the Competition Bureau while navigating this evolving landscape.

Addendum (May 27, 2025): Underscoring Hoffer’s point about potential for lenience in U.S. compared to Canada, the Wall Street Journal reports that a provision in the House Republicans’ Mega Tax Bill aims to block state and local regulation of AI and automated systems for 10 years. If passed, the bill wouldn’t stop the class-action suits against RealPage for antitrust and consumer-protection violations; however, it would offer RealPage legal relief by halting efforts to ban algorithmic pricing systems for the next decade.