Dive Brief:

• The Seattle City Council unanimously voted to adopt a one-year ban on bidding apps for housing rental units, such as Rentberry and Biddwell, so it can investigate the impact the technology has on the city's housing crisis.
• Landlords list available rental units on the apps and potential renters bid against each other for the property. Leases are granted to the highest bidders.
• Seattle will evaluate how the apps might drive up the cost of housing and if they comply with city's fair housing laws.

Dive Insight:

These rent bidding apps are still an emerging technology, having only been operational since 2016. The Seattle City Council indicates that only about a dozen properties in the city are known to have been listed on the apps so far, and the moratorium therefore should have minimal negative effects on landlords. The council members want to make sure the apps do not harm the city's housing ecosystem and discriminate against low-income residents before allowing them to gain more traction.

"Innovation in technology has been a key component of what makes Seattle such a great city, adding to our economic diversity. At the same time, we must have the opportunity to learn about new platforms, such as these ‘rent bidding’ platforms, and ensure that they live up to the equity and housing access values of our city," Councilmember Teresa Mosqueda, the legislation's sponsor, said in a statement. 

One of the specific areas under investigation will be the apps' compliance with the city's "first-in-time" law, which went into effect at the start of last year and started being enforced in July. It requires landlords to provide each applicant with screening criteria and to accept the first qualified applicant for each available unit. There is concern that the apps might violate the law by allowing landlords to hold out for the highest bidder instead of choosing the first qualified applicant.

Some landlords sued the city over the first-in-time law, claiming that the state of Washington already has adequate laws preventing housing discrimination and that Seattle's law is government overreach. A judge is expected to hand down a ruling in the coming weeks.

The first-in-time law is one of several that Seattle's City Council has passed or considered recently to combat the affordable housing crisis, which some people say is fueled by the city's tech sector boom. In December, the council approved limiting the number of units that people can rent out on short-term rental sites, like Airbnb, to prevent the housing supply from further shrinking. A councilmember and the mayor also proposed a plan to expand the city's Mandatory Affordable Housing requirements from six neighborhoods to 27. 

With Seattle already facing a lack of housing supply and continuously increasing rents, the rent bidding apps are largely viewed as contributing to bumping up rent prices. If the practice of granting leases to the highest bidder becomes more widespread, it could make rents even less affordable and might force people — especially low-income residents — out of their homes.