On October 16, 2025, Governor Kathy Hochul signed Assembly Bill 1417-B which relates to the use of algorithmic pricing by landlords for the purpose of determining the amount of rent to charge a residential tenant. The law, effective December 15, 2025, amends New York’s General Business Law, to add section 340-b, entitled “Agreements to not compete with respect to residential rental dwelling units”, which provides, inter alia,
3. It shall be considered an unlawful agreement in violation of this article for a residential rental property owner or manager to knowingly or with reckless disregard set or adjust rental prices, lease renewal terms, occupancy levels, or other lease terms and conditions in one or more of their residential rental properties based on recommendations from a software, data analytics service, or algorithmic device performing a coordinating function.
The law defines “Residential rental property owner or manager” as “any individual or entity that owns or is a beneficial owner of, directly or indirectly, in whole or in part, or manages one or more residential rental dwelling units in New York state” (GBL § 340-b[1][d]).
“Algorithm” is defined as “a computational process that uses a set of rules to define a sequence of operations” (GBL § 340-b[1][a]).
“Algorithmic Device” is defined as “any machine, device, computer program or computer software that on its own or with human assistance performs a coordinating function” (GBL § 340-b[1][b]).
Finally, the law defines a “Coordinating function” as performing the below subfunctions:
(i) collecting historical or contemporaneous prices, supply levels, or lease or rental contract termination and renewal dates of residential dwelling units from two or more residential rental property owners or managers, provided that at least two such residential rental property owners or managers are not wholly-owned subsidiaries of the same parent entity or otherwise owned or managed by the same residential rental property owner or manager;
(ii) analyzing or processing the information described in subparagraph (i) of this paragraph using a system, software, or process that uses computation, including by using that information to train an algorithm; and
(iii) recommending rental prices, lease renewal terms, ideal occupancy levels, or other lease terms and conditions to a residential rental property owner or manager.
The sole carveout provided for in the law, is use of a “coordinating function” for the “purpose of establishing rent or income limits in connection with rent regulated apartments (see General Business Law § 340-b [“a product used for the purpose of establishing rent or income limits in accordance with the emergency tenant protection act of nineteen seventy-four, as amended, the rent stabilization law of nineteen sixty-nine, as amended, the city rent and rehabilitation law, the emergency housing rent control law, or an affordable housing program administered by a federal, state, or local government or other political subdivision shall not be considered to be performing a coordinating function.”]).
What does this mean? The law renders it a violation of the Donnelly Act for residential landlords to knowingly or recklessly use algorithms to set rental amounts or other lease terms. The Donnelly Act, codified in New York General Business Law §§ 340-347, prohibits “agreements for monopoly or restraint of trade” generally. More simply, it is prohibited for property owners to use software or services that collect information from other owners and aggregate that information to make market recommendations about rents, inventory, lease terms, occupancy levels, etc. Property owners are liable for violating this law if they are aware of improper use of an algorithm, or if they are aware that there is a substantial risk that an algorithm is performing a “coordinating function.”
This law does not distinguish between use of public information versus private information, as compared to a bill pending in the U.S. Senate which prohibits use of “non-public” competitor data in creating pricing algorithms (S. 232).
Donnelly Act violations carry heavy consequences. Declared a Class E felony, an individual convicted of violating or attempting to violate the same may be punished by either a maximum of four years imprisonment or a fine not in excess of $100,000. A corporation convicted of violating or attempting to violate the Donnelly Act is subject to a maximum fine of $1 million for each violation.
It is recommended that New York landlords review any pricing programming and processes used by their leasing team to determine whether information relied upon is sourced from programs and /or providers gathering industry data from competitors.
To know more, please contact Cori A. Rosen, Member of R&E’s Litigation Department and the Leader of the firm’s Human Rights Practice, who authored this update.