Federal Antitrust Suit Targets Major Landlords for Alleged Rent-Fixing Scheme “`

The U.S. Department of Justice has filed a lawsuit against several large property management companies, alleging they conspired to inflate rental costs through coordinated actions. These actions allegedly involved using an algorithm to set prices and sharing sensitive market data amongst competitors.

This legal action comes amidst a challenging rental market, where rising rents outpace income growth. Data indicates that in 2022, half of American renters spent over 30% of their income on rent and utilities—an unprecedented high.

This financial strain forces difficult choices between essentials like food, medicine, and rent. It also contributes to increased evictions, with children disproportionately affected; 1.5 million evictions occur annually, according to Princeton University’s Eviction Lab.

While various factors contribute to the housing crisis, including a decade-long slowdown in new housing construction, the Justice Department contends that major landlords bear significant responsibility.

The department, along with ten states, is accusing six property management firms—managing over 1.3 million units across 43 states and Washington, D.C.—of colluding to prevent rent reductions.

Greystar Real Estate Partners LLC, a defendant, denied the allegations in a statement on their website, pledging a strong defense.

“Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices,” the statement said. “We will vigorously defend ourselves in this lawsuit.”

The lawsuit alleges these landlords exchanged confidential rental and occupancy data—including renewal rates, algorithm usage, concessions offered, and quarterly pricing strategies—through various communication channels.

The Justice Department stated that one landlord agreed to cooperate, leading to a proposed settlement that restricts the company’s use of competitor data and algorithms in rent setting.

“Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country,” said Doha Mekki, acting assistant attorney general for the department’s antitrust division.

These landlords were added to an existing lawsuit against RealPage, a provider of rental pricing algorithms. Prosecutors claim the algorithm utilizes sensitive competitive information, enabling landlords to synchronize pricing and stifle competition.

RealPage’s senior vice president for communications, Jennifer Bowcock, stated that their software is used in less than 10% of rental units and its price recommendations are adopted less than half the time, arguing against accusations of causing affordability issues.

“It’s past time to stop scapegoating RealPage—and now our customers—for housing affordability problems when the root cause of high housing costs is the under-supply of housing,” Bowcock said.

—Bedayn is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.