The U.S. Division of Justice on Friday sued a serious actual property agency, alleging the corporate’s algorithmic software program permits landlords throughout the nation to set lease 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 lease costs for each vacant items and renewal charges for present tenants.
In a really aggressive market, authorities mentioned, property house owners can be compelled to compete with one another, serving to to drive down rental prices for Individuals.
Nonetheless, in line with the lawsuit, RealPage enabled the alternative.
When changing into a shopper, supposedly competing landlords share nonpublic info — reminiscent of occupancy and rents on executed leases — with RealPage, which then makes use of that knowledge to suggest rents at particular person properties.
“As Individuals wrestle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” Assistant Atty. Normal Jonathan Kanter mentioned in an announcement.
RealPage didn’t instantly return a request for remark.
The corporate beforehand referred to as related allegations false and deceptive, saying shoppers can decline its suggestions, which at occasions embody dropping lease.
However in its grievance, the Justice Division pointed to situations the place RealPage described its software program as a software for maximizing lease and outperforming the market. Authorities additionally alleged the corporate made it tougher for landlords to reject its suggestions than settle for them.
“There may be larger good in everyone succeeding versus primarily attempting to compete towards each other in a manner that really retains the complete business down,” a RealPage govt mentioned, in line with the lawsuit.
At one other level, RealPage described its instruments as guaranteeing landlords are “driving each doable alternative to extend worth even in essentially 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 firms reminiscent of 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 an announcement, Atty. Gen. Merrick B. Garland mentioned the Justice Division would proceed to aggressively implement antitrust legal guidelines.
“Individuals mustn’t must pay extra in lease as a result of an organization has discovered a brand new solution to scheme with landlords to interrupt the legislation,” Garland mentioned.
