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 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 models and renewal charges for current tenants.
In a very aggressive market, authorities stated, property homeowners can be pressured to compete with one another, serving to to drive down rental prices for People.
Nevertheless, in accordance with the lawsuit, RealPage enabled the other.
When changing into a shopper, supposedly competing landlords share nonpublic info — corresponding to occupancy and rents on executed leases — with RealPage, which then makes use of that knowledge to suggest rents at particular person properties.
“As People wrestle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” Assistant Atty. Common Jonathan Kanter stated in a press release.
RealPage didn’t instantly return a request for remark.
The corporate beforehand known as related allegations false and deceptive, saying purchasers can decline its suggestions, which at occasions embrace dropping lease.
However in its criticism, the Justice Division pointed to cases the place RealPage described its software program as a software for maximizing lease and outperforming the market. Authorities additionally alleged the corporate made it harder for landlords to reject its suggestions than settle for them.
“There’s higher good in all people succeeding versus basically making an attempt to compete towards each other in a approach that really retains your entire business down,” a RealPage government stated, in accordance with the lawsuit.
At one other level, RealPage described its instruments as guaranteeing landlords are “driving each doable alternative to extend worth even in probably the most downward trending or sudden circumstances,” the criticism 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 conduct.
Vice President Kamala Harris has additionally criticized the usage of rent-setting algorithms whereas operating for president.
In a press release, Atty. Gen. Merrick B. Garland stated the Justice Division would proceed to aggressively implement antitrust legal guidelines.
“People mustn’t need to pay extra in lease as a result of an organization has discovered a brand new strategy to scheme with landlords to interrupt the legislation,” Garland stated.
