The San Francisco Board of Supervisors on Tuesday unanimously passed an ordinance prohibiting the sale or use of algorithmic devices to set multifamily rents or manage occupancy levels, including technology developed by RealPage, Yardi and other third-party revenue management companies.

The new law sets a precedent, as San Francisco became the first city in the U.S. to ban this type of property management software.

“Third-party revenue management companies such as RealPage and Yardi” make price and occupancy recommendations that are used by San Francisco’s largest corporate landlords, including Brookfield Properties, Greystar, Equity Residential and UDR, Board of Supervisors president and San Francisco mayoral candidate Aaron Peskin said in a statement.

A spokesperson for RealPage told Bisnow in a statement that the new law’s focus is “misplaced.”

“Housing affordability should be the real focus,” RealPage spokesperson Jennifer Bowcock said. “While we share the San Francisco Board of Supervisors’ goal of helping renters, this ordinance will do nothing to make housing more affordable in the city, where there is a severe supply shortage of rental units that needs to be addressed.”

RealPage said it only serves 10% of the rental market in San Francisco with its revenue management software.

“Our software is purposely built to be legally compliant and can be configured to comply with the new ordinance,” the statement continues.

“The ordinance’s misplaced focus on nonpublic information is a distraction that will only make San Francisco’s historical problems worse by banning an important component of pricing technology that RealPage uses responsibly and that benefits residents, property managers, and the rental housing ecosystem as a whole.”

According to Peskin, owners and property managers that use revenue management software, not just RealPage’s technology, account for 70% of the city’s multifamily units.

“Banning automated price-fixing will allow the market to work and bring down rents in San Francisco,” Peskin said. “We want to put more units on the market. RealPage has exacerbated our rent crisis and empowered corporate landlords to intentionally keep units vacant.”

Washington, D.C., filed a lawsuit against RealPage alleging similar price collusion in November 2023.

Thirty separate pieces of litigation, class-action lawsuits from renters in Boston to New York to Seattle, were consolidated in Nashville federal court last year as well.

In San Francisco, low levels of new multifamily construction will enable rent growth of 3% to 5% this year, NAI NorCal reported in a second-quarter research report. Vacancy continues to decline, reaching 6.4% in Q2, the lowest rate since the first quarter of 2020.