Committee Substitute February 18, 2025 in HJC: 

HJCcs/HB 215: House Judiciary Committee Substitute for House Bill 215 enacts a new section of the Uniform Owner-Resident Relations Act, targeting the use of AI-driven software that influences rental pricing strategies among landlords. It defines key terms such as “consciously parallel pricing coordination,” which refers to tacit agreements between landlords to adjust rent based on AI tools, “coordinating function,” which involves AI-based collection, analysis, and processing of rental data for pricing recommendations, and “coordinator,” which refers to entities that operate these AI-driven tools.

The bill prohibits rental property owners from subscribing to, contracting with, or exchanging any form of consideration for AI-based pricing services. It also bans AI pricing coordinators from facilitating agreements among landlords to influence rent prices and prohibits two or more property owners from engaging in AI-driven parallel pricing coordination. However, HJCcs/HB 215 also clarifies that certain entities and applications are exempt from these prohibitions. The bill does not apply to government entities that regulate rent pricing under legal rental price restriction programs. Additionally, software or data analytics platforms that generate aggregated rental reports but do not recommend rent prices, fees, or occupancy levels are not subject to the restrictions. It further exempts software or data analytics platforms used solely for research, statistical reporting, testing, or software development.

By refining these definitions and introducing specific exemptions, HJCcs/HB 215 ensures that AI-driven market research remains permissible while restricting AI-based rent-setting practices that could lead to price manipulation.

Implications

The bill carries legal, economic, and technological implications for rental markets and AI-driven real estate analytics. By prohibiting landlords from using AI-based pricing tools that facilitate rent coordination, HJCcs/HB 215 seeks to prevent anti-competitive practices that may contribute to rent inflation. It reinforces fair market competition and aims to protect tenants from AI-driven rent surges resulting from coordinated pricing strategies.

From a regulatory perspective, the bill aligns New Mexico’s housing laws with growing national concerns over AI’s role in market manipulation. However, by including explicit exemptions for government rent control programs and AI-driven research analytics, HJCcs/HB 215 balances the need for tenant protections with the ability to leverage AI for market analysis and policy development. The bill could impact AI-driven rental pricing services, potentially limiting their adoption by landlords while maintaining their viability for non-pricing applications such as research and statistical modeling.

Comparison of Changes from HB 215 to HJCcs/HB 215

HJCcs/HB 215 retains the core provisions of HB 215, which prohibit the use of artificial intelligence (AI) to manipulate rent pricing under the Uniform Owner-Resident Relations Act, while introducing key refinements and exclusions that clarify its application. One of the primary changes in HJCcs/HB 215 is the introduction of explicit exemptions for certain entities. Under HB 215, a “coordinator” was broadly defined as any person or entity operating a software or data analytics service that performs a coordinating function, including rental property owners using AI-driven tools for pricing decisions. HJCcs/HB 215 narrows this definition by exempting government entities that set or limit rent or sale prices under rental price restriction programs, software or data analytics services that generate or use rental data in an aggregated manner without recommending rent prices or lease terms, and software or analytics services used solely for research, statistics, testing, or software development.

The bill also refines the definition of “coordinating function.” HB 215 originally defined this term broadly to include the collection, analysis, and processing of rental pricing data for AI-driven recommendations.HJCcs/HB 215 retains these definitions but limits their scope by ensuring that aggregated data reports and non-pricing-related analytics do not fall under the bill’s prohibitions. Additionally, both versions of the bill prohibit rental property owners from subscribing to or contracting with AI-based pricing services, AI-driven platforms from facilitating agreements among landlords to coordinate rent prices, and property owners from engaging in parallel pricing coordination using AI tools. However, HJCcs/HB 215 reinforces these prohibitions while ensuring that AI tools used for non-pricing-related analytics, such as research or aggregated reporting, remain permissible.