'Housing cartel' landlords accused of price-fixing rent rates using automated software to maximize rental profits

Dozens of landlords are accused of price-fixing their rent rates through the use of the online software RealPage, a group of tenants alleged.

RealPage is a property management software that uses data to recommend pricing on millions of properties in the United States.

Tenants in Jersey City, New Jersey, have taken RealPage and 34 landlords to court in a class-action lawsuit regarding rent prices for a 527-unit building. The popular water-adjacent properties are located approximately 20 minutes from the World Trade Center.

Separately, the Department of Justice has also filed a statement of interest that alleges landlords shared non-public information with RealPage, including vacancy data, and relied on that information to inflate rental prices.

The automations must be "subject to the same condemnation" as price-fixing schemes, the DOJ said. "Long-standing legal principles apply with equal force to this new machinery," the department added, according to Reuters.

In November 2023, the attorney general of Washington, D.C., submitted a different complaint against RealPage and 14 other landlords.

These were not typical landlords. They operate more than a whopping 50,000 rental units in D.C. With that many units entered into an automated system, that can mean thousands of tenants simultaneously have their rent increased should the landlord choose to follow the recommendations.

"Effectively, RealPage is facilitating a housing cartel," Attorney General of the District of Columbia Brian Schwalb reportedly said. "Rather than making independent decisions on what the market here in D.C. calls for in terms of filling vacant units, landlords are compelled, under the terms of their agreement with RealPage, to charge what RealPage tells them," he continued.

"Defendants’ coordinated and anticompetitive conduct amounted to a district-wide housing cartel," Schwalb added.

Particularly, one of the tools used on the website is called YieldStar, which balances lease lengths, occupancy, and pricing data to optimize revenue.

"Just turning the system on will outperform your manual analyst. There’s almost no way it can’t," said Jeffrey Roper, a former RealPage employee and inventor of YieldStar.

RealPage told CNBC that its revenue management products use anonymized, aggregated data to deliver the pricing recommendations and can increase a landlord's revenue between 2% and 7%. The company also told the outlet, however, that customers are not obligated to take its price suggestions.

The company was acquired by firm Thoma Bravo in 2021 for $10.2 billion; however, the parent company has reportedly claimed it is not liable for RealPage's alleged actions.

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