West Hollywood is set to ban algorithmic rent-pricing software as soon as tonight, when the City Council is expected to give final approval to Ordinance No. 26-08.
The ordinance passed what is known in fancy political speak as “its first reading” April 20 with all five council members in favor. It’s on tonight’s consent calendar for a second reading and adoption. If the council approves it, as is expected – hence consent calendar – the law takes effect 30 days later.
This will make it illegal for landlords to use a type of software that sets or recommends rental rates or occupancy levels based on nonpublic competitor data. That data is defined as information about actual rents, lease dates, and vacancy levels at properties the landlord does not own or manage, when the information is less than 90 days old. Each month a landlord charges rent set by using the software it will count as a separate violation. Each unit where the software was used counts as a separate violation as well.
Vendors and companies that sell or license the software to West Hollywood landlords also face liability under the ordinance.
Penalties run up to $1,000 per violation. The City Attorney can file civil actions for damages, injunctive relief, and return of illegal profits. Tenants can also file their own civil actions and recover attorney’s fees if they prevail.
The ordinance cites a 2024 White House Council of Economic Advisors finding that algorithmic pricing software cost tenants whose landlords used it $70 per month on average nationally. In the Los Angeles metropolitan area, the average was $34 per month, or $408 per year.
The council also noted that even renters whose landlords do not use the software are likely to face higher rents. Demand increases for units not priced through the algorithms.
San Francisco was the first city in the nation to ban the technology. Berkeley, San Diego, San Jose, and Santa Monica have adopted, proposed, or are drafting similar measures.
The Numbers Behind the Ban
The ordinance lays out the affordability crisis in detail. To afford the average two-bedroom apartment in West Hollywood at $2,814 per month, a household must earn at least $112,560 per year. Across Los Angeles County and surrounding counties, 55.3% of renter households spend 30% or more of their gross income on housing. Nearly 29% spend half their income on housing costs.
The gap is most noticeable at the lowest income levels. The City’s Housing Element found that 79.6% of extremely low-income households, 94.5% of very low-income households, and 66.9% of low-income households pay more than 30% of their income toward rent.
The ordinance also cites a five-year United States Census Bureau survey showing West Hollywood’s rental vacancy rate at 3.2%, matching Los Angeles County.
But more recent data tells a different story. Leona Rollins, the City’s Rent Stabilization Manager, told the Rent Stabilization Commission earlier this year that the City’s vacancy rate had climbed from 8.6% to as high as 11.2% — the highest in the area — driven largely by newer market-rate developments sitting partially empty. Rollins said at the time the rate was averaging around 8%.
Many argue that West Hollywood does not have a housing shortage — it has an affordable housing problem. The vacancy figures support that view. Units exist. They are simply priced beyond what most residents can afford to pay.
The ordinance does not cap rent. It targets only software that uses nonpublic competitor data to coordinate pricing recommendations among landlords.
It seems to me that the areas that have the most government involvement and rules and regulations, including rent control are the areas that have the highest rents. Now I realize it’s not as simple as that, but you’ve got to admit that gives you something to think about.
Enforcement will require the support of the actual companies providing the algorithmic service. Without penalties for them, how will we be able to move forward with prosecution? What is the city’s plan here?
The article says renters are being “cheated” out of $35.00 per month due to the software. This is certainly within the margin of error and can’t be proven. Most landlords will just start rounding up to the nearest hundred. No way this reduces rents for anyone.
West Hollywood is the epicenter hotspot of an affordable housing crisis along with Santa Monica and Brentwood and Beverly Hills with new residents displacing the very low to low income residents who are more rent burdened than anyone else! It’s no coincidence that these sections also have the most short term rentals that the Cities of Los Angeles, West Hollywood and Beverly Hills, and Santa Monica all had ordinances making them illegal yet did not and still do not enforce their own short term rental laws! I witnessed this in my rent controlled complex where a renter was approved only… Read more »
The city government really needs to crack down on the affordable housing issue. They have to set rent caps, and set that each tenant has to apply for an apartment and the rent cannot be any more than 25% of their net income after taxes and other deductions. They need to clamp down on landlords who are sitting on their ass and getting rich while the rest of us actually work for a living. Sitting on your ass and collecting rent was never meant to be a livelihood, it was meant to be a supplement. Everyone who is not disabled… Read more »
How does the City propose to enforce this ban? Is simply having the app going to be a sufficient to secure a conviction? Will the City monitor landlord’s computers? What was the experience in obtaining convictions of the other jurisdictions who have adopted this sort of ban? Is this ban more performative than practical?
A housing shortage is a primary driver of the affordable housing crisis,as a significant deficit in supply causes housing costs to rise faster than household incomes..!
You seem to avoid mentioning that all WeHo Council allows to be built is luxury apartments. How does that help the affordable housing crisis?
Let’s all just get the facts straight so that we have full-transparency & that something can be somewhat authentic in this city, the 3 majority council members DO NOT care about the affordability issues in this city, they DO NOT care about the loss of RSO units housing our seniors & long term tenants, they CARE about the development agreements provided to the developers for luxury units so they will continue donating and supporting their electoral campaigns. New 2bd. 2 bath units will be far pricier than the avg. $2,850 referred to, like $3,800-$4,400.. DONE & DONE
Google this: Multiple affordable housing projects are currently being built, approved, or funded in West Hollywood. Recent developments include the imminent opening of Lexington Gardens at 1201 N. Detroit St., which offers 47 affordable units for low-income households and those with special needs. Additionally, construction is underway for an 89-unit affordable complex at 910 N. Wetherly Dr., expected to complete in 2027, and a new supportive housing complex at 1238 Larrabee St. is set to receive $4.3 million in county funding. Other significant projects include the Bond Hotel & Residences at 7811 Santa Monica Blvd., which was recently approved with… Read more »
Will this be enforced im a timely fashion? Doubtful..