The US Department of Justice has initiated legal action against several major landlords, accusing them of collaborating to maintain high rental prices by utilising an algorithm for setting rents and sharing confidential information with competitors to maximise profits.
This lawsuit arrives at a time when US renters continue to face mounting pressure from an unforgiving housing market, as wages fail to keep pace with rising rents. Recent data reveals that, in 2022, half of American renters allocated more than 30% of their income to rent and utilities.
The financial strain is exacerbated by the daily struggle to balance essential expenses such as medication, groceries, and school supplies with rent payments. As a result, eviction notices and lengthy legal battles have become commonplace, with children bearing the brunt of these hardships. According to Princeton University’s Eviction Lab, 1.5 million people are evicted annually.
Although multiple factors have contributed to the housing crisis, including a decline in new home construction over the past decade, the Justice Department’s lawsuit highlights the role played by large landlords in exacerbating the issue.
The department, supported by 10 states—including North Carolina, Tennessee, Colorado, and California—has accused six landlords, who collectively manage over 1.3 million rental units across 43 states and the District of Columbia, of conspiring to prevent rent reductions.
One of the defendants, Greystar Real Estate Partners LLC issued an unsigned statement on its website, “Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices.
“We will vigorously defend ourselves in this lawsuit.”
The lawsuit alleges that the landlords involved exchanged sensitive information about rents and occupancy levels with competitors through various channels, such as email, phone calls, and group discussions. The data shared allegedly included renewal rates, the frequency of algorithmic price recommendations, the use of incentives like offering one month’s free rent, and future pricing strategies.
The Justice Department revealed that one of the six accused landlords has agreed to cooperate with the investigation. The proposed settlement would impose restrictions on how the company can use competitors’ data and algorithms to set rental prices.
“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,” stated Doha Mekki, the acting assistant attorney general for the department’s antitrust division, in a press release issued on Tuesday.
The landlords have been added to an ongoing lawsuit against RealPage, which operates an algorithm that advises landlords on setting rental prices. Prosecutors contend that the algorithm uses sensitive competitive data, enabling landlords to synchronise their pricing and avoid the kind of competition that would typically drive rents down.
Frances Ibiefo
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