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 very aggressive market, authorities mentioned, property homeowners can be compelled to compete with one another, serving to to drive down rental prices for People.
Nonetheless, in keeping with the lawsuit, RealPage enabled the alternative.
When turning into a consumer, supposedly competing landlords share nonpublic data — similar to occupancy and rents on executed leases — with RealPage, which then makes use of that information to advocate rents at particular person properties.
“As People battle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” Assistant Atty. Common Jonathan Kanter mentioned in a press release.
RealPage didn’t instantly return a request for remark.
The corporate beforehand known as comparable allegations false and deceptive, saying shoppers can decline its suggestions, which at instances embody dropping hire.
However in its criticism, the Justice Division pointed to cases the place RealPage described its software program as a software for maximizing hire 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 everyone succeeding versus basically making an attempt to compete towards each other in a manner that really retains all the trade down,” a RealPage government mentioned, in keeping with the lawsuit.
At one other level, RealPage described its instruments as making certain landlords are “driving each doable alternative to extend worth even in probably the most downward trending or surprising circumstances,” the criticism says.
Antitrust enforcement has been a spotlight of the Biden administration. The Justice Division has sued main firms similar to Google and Apple, alleged they engaged in anticompetitive habits.
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 mentioned the Justice Division would proceed to aggressively implement antitrust legal guidelines.
“People shouldn’t need to pay extra in hire as a result of an organization has discovered a brand new technique to scheme with landlords to interrupt the regulation,” Garland mentioned.