Rental Housing and Artificial Intelligence Federal Policy

As apartment firms explore the opportunities surrounding artificial intelligence (AI), policymakers are increasingly focused on protecting national security and consumers while also being mindful of unnecessarily inhibiting innovation.

By Julianne Goodfellow, VP of Government Affairs, NMHC

The emergence of ChatGPT and other publicly accessible AI have drawn attention to the potential benefits and concerns regarding the technology. Overall, policy activity in this space has largely been incremental as agencies and members of Congress work to assess, understand and adapt to the benefits and risks of AI.

From smart home automation to improving property level climate resilience and sustainability to providing a seamless, convenient resident experience, the opportunities for AI in the multifamily space are numerous. Yet with that, like most other technologies, the risk landscape may expand. In recent months, a sense of urgency among lawmakers and the administration has emerged due to the rapid rate of innovation in AI, which could lead to broader regulatory and legislative efforts with impact housing providers and their residents.

AI and the Housing Market

The Administration and members of Congress have increasingly posed questions about AI, machine learning and other technologies and the role they play in the housing market. It’s a growing area of concern for multifamily as resident screening, property operations and smart technology deployments are all coming under scrutiny.

Outside of the housing space, but with important similarities, there is a significant amount of activity around the relationship between AI and national security, defense, financial services and the workforce.

Will Congressional Discussions Lead to Action?

At this point, most of the discussion around AI in Congress is just that: discussion. There are relatively few legislative proposals currently introduced in the 118th Congress. The most significant legislative development in AI regulation is Majority Leader Chuck Schumer’s (D-NY) SAFE Innovation Framework, which focuses on five guardrails in AI development: security, accountability, foundations, explain and innovation.

Leader Schumer’s framework is in the early stages without a timeline for the release of legislative text. However, it is significant that he is pushing ahead with an AI framework in a space that has had relative bipartisan cooperation so far.

Lawmakers are increasingly concerned about the use of AI in decisions about housing, lending and access to financial products, among other areas. Of particular note, House Financial Services Committee Ranking Member Waters wrote a letter to Chair McHenry on June 15, 2023, urging the committee to hold a hearing on the effects of generative AI on housing and financial services.

Biden Administration Prioritizes AI in the Regulatory Space

President Biden has prioritized AI, particularly as ChatGPT and other AI technologies became accessible to the general public. In addition to focusing on optimizing the benefits of AI while simultaneously managing its risks, the Administration is focused on justice and civil rights.

In October 2022, President Biden released the “Blueprint for an AI Bill of Rights,” detailing five principles seeking to provide guidance on the use of AI “help guide the design, development and deployment of artificial intelligence and other automated systems to protect the rights of American people.” The blueprint focuses on consumer protection, algorithmic discrimination and harmful data practices.

Since then, his Administration has taken steps to regulate space. The Consumer Financial Protection Bureau (CFPB), FTC, Department of Justice’s Civil Rights Division and EEOC released a joint statement clarifying that discrimination and bias in automated systems fall within the scope of their enforcement authorities.

The FTC and CFPB have also sought comment on the effect of resident screening on renters’ ability to acquire housing, notably including use of algorithms as part of the inquiry. Specifically, the Request for Information asks rental housing stakeholders—both renters and housing providers— about screening practices including the use of criminal records, eviction records and algorithms in resident screenings and how these may be driving discriminatory outcomes or have an adverse impact on underserved communities.

In response, NMHC led a Call to Action that resulted in nearly 100 housing providers submitting accounts to the FTC and CFPB. NMHC also submitted comments on behalf of the industry, urging the agencies to recognize the value of screening and to avoid measures that unreasonably disrupt necessary operational and property management practices. We argued that the federal government should ensure continued access to the screening tools and accurate consumer data necessary to make informed business decisions and focus its efforts and funding priorities on ensuring the enforcement of consumer protection laws on perpetrators of identity theft, fraud, and other unlawful behavior.

Recently, the White House reached a voluntary agreement with seven top AI companies to set guardrails around AI technology development, including safety, security and trust. The companies committed to internal and external security testing, sharing information across the public and private sectors on best practices for managing risk, protecting their systems’ model weights, instituting an incentive system for third-party reporting of vulnerabilities, publicly reporting the results of their red-team tests, and developing technology to report when content is AI generated, as well as prioritizing research on the societal risks AI may pose.

National Security Remains a Key Concern

In addition to the legislative and regulatory efforts to establish guardrails on AI technologies, there is a very real national security concern. For example, the FBI warns of nation states exploiting AI for cyberattacks, pointing specifically to China and Russia. The FBI reports China is exploiting AI technologies as part of its ongoing hacking efforts. This is a particular threat because China has targeted innovation and troves of data, both of which could be used to train machine learning models. Further, the FBI has tracked Russian cyber criminals “attempt[ing] to bypass geo-fencing safeguards implemented within ChatGPT that were meant to restrict regional access and verify identities.”

While not directly related to the concerns of housing providers, any national security incident could spur policymakers to act quicker than currently anticipated and regulation or policy could ultimately impact all end users of this technology.

What’s Next

President Biden has indicated a continued focus on AI and is expected to sign an executive order on AI sometime in the next few months. Biden’s February 2023 executive order explicitly expanded his Administration’s focus on equity, to root out bias in technology, including AI, across the federal government. Civil rights concerns will continue to be a significant consideration in the Administration’s AI policy. In the meantime, committees in both the House and Senate continue to work on legislative proposals and will continue to hold hearings on various aspects of AI.

Julianne Goodfellow jgoodfellow@rettc.org