The U.S. Division of Justice on Friday sued a significant actual property agency, alleging the corporate’s algorithmic software program allows landlords throughout the nation to set hire at artificially excessive charges.
The lawsuit, joined by a number of states together with California, focuses on software program from Texas-based firm RealPage. The software program is utilized by many landlords to set hire costs for each vacant items and renewal charges for current tenants.
In a really aggressive market, authorities stated, property homeowners can be compelled to compete with one another, serving to to drive down rental prices for Individuals.
Nevertheless, based on the lawsuit, RealPage enabled the other.
When turning into a consumer, supposedly competing landlords share nonpublic data — corresponding to occupancy and rents on executed leases — with RealPage, which then makes use of that knowledge to advocate rents at particular person properties.
“As Individuals battle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” Assistant Atty. Basic Jonathan Kanter stated in a press release.
RealPage didn’t instantly return a request for remark.
The corporate beforehand referred to as comparable allegations false and deceptive, saying shoppers can decline its suggestions, which at occasions embrace dropping hire.
However in its grievance, the Justice Division pointed to situations the place RealPage described its software program as a instrument for maximizing hire and outperforming the market. Authorities additionally alleged the corporate made it tougher for landlords to reject its suggestions than settle for them.
“There’s higher good in everyone succeeding versus basically making an attempt to compete towards each other in a means that truly retains your entire trade down,” a RealPage government stated, based on the lawsuit.
At one other level, RealPage described its instruments as guaranteeing landlords are “driving each potential alternative to extend worth even in probably the most downward trending or sudden circumstances,” the grievance says.
Antitrust enforcement has been a spotlight of the Biden administration. The Justice Division has sued main corporations corresponding to Google and Apple, alleged they engaged in anticompetitive habits.
Vice President Kamala Harris has additionally criticized using rent-setting algorithms whereas working for president.
In a press release, Atty. Gen. Merrick B. Garland stated the Justice Division would proceed to aggressively implement antitrust legal guidelines.
“Individuals shouldn’t should pay extra in hire as a result of an organization has discovered a brand new technique to scheme with landlords to interrupt the legislation,” Garland stated.
