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Seattle temporarily halts rent bidding. (Flickr Photo / Shumei_There)

Editor’s note: This post has been updated with a statement from Seattle City Councilmember Teresa Mosqueda.

Rentberry, a San Francisco apartment rental service, and a Seattle landlord are suing the city over a one-year ban on websites that allow prospective tenants to bid on rental homes.

Rentberry and the landlord, Delaney Wysingle, claim that the one-year moratorium on rent bidding sites infringes on their First amendment Right to free speech by restricting communications between renters and landlords. Pacific Legal Foundation, a libertarian legal organization based in Sacramento with an office in Bellevue, Wash. is representing the plaintiffs.

“By prohibiting Plaintiffs from communicating through a rental housing bidding platform, the City currently maintains and actively enforces a set of laws, practices, policies, and procedures under color of state law that deprive Plaintiffs of their rights of free speech, in violation of the First Amendment to the United States Constitution,” according to the suit filed in U.S. District court in Seattle.

Seattle City Councilmember Teresa Mosqueda, released the following statement responding to the lawsuit:

I believe that our legislation placing a moratorium on the practice of bidding rents through these platforms, pending full research on how they fit in with our Fair Housing laws, falls within the accepted and legal ways by which we regulate access to rental housing. I have full faith in our City Attorney’s Office to defend against this lawsuit, and look forward to continuing work to ensure all Seattle residents have access to the housing they need.

We passed a moratorium on rent bidding applications so we as policy makers can have an opportunity to determine how these platforms intersect with our Fair Housing laws. This is a civil rights issue regarding equity in access to housing in Seattle. I believe we are well within our rights to “push pause” and ensure that our city has the opportunity to consider how our regulatory framework applies these platforms, and how they comport with equity in access to housing before they permeate the market.

I do not believe there are any “free speech” violations associated with this legislation. Landlords still retain the right to post rental listings on whatever sites they choose. Rather, this law is a means to identify how the process of bidding rents through these platforms comports with our Fair Housing laws. Our city is working with landlords and consumers as we study this issue in anticipation of revisiting the moratorium next year – with more information and data to inform any long-term regulation.

Startups like Rentberry allow landlords to list rental units so that would-be tenants can offer higher or lower prices, based on what they would be willing to pay. The sites take a percentage of the difference. Operators of these rental auction sites claim supply and demand already affect rent prices and that their services just make the process more transparent.

But the City Council passed a one-year moratorium on sites like Rentberry over concerns rent bidding could make it harder for low-income residents to afford homes. Seattle will take the year to study whether bidding on rent violates city law and then reassess whether the companies can continue to operate in the city.

Here is Rentberry’s full complaint:

Rentberry complaint by Nat Levy on Scribd

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