Lawsuit alleges D.C. landlords software coordinated rent raise

Washington D.C.’s Legal professional Basic Brian Schwalb filed a lawsuit on Wednesday alleging that 14 of the town’s largest landlords colluded with a property administration software program firm to inflate rental costs throughout the town artificially.

In accordance with a Nov. 1 ArsTechnica report, the civil complaint accuses the landlords of conspiring with RealPage, a Texas-based supplier of lease pricing software program, of fixing rental charges above honest market worth. It claims the alleged scheme affected over 30% of condominium buildings with 5 or extra items and 60% of buildings with 50 or extra items in D.C.

RealPage and the defendant landlords illegally conspired to artificially increase rents by taking part in a centralized, anticompetitive scheme, inflicting District residents to pay tens of millions of {dollars} above honest market costs,” stated Schwalb.

The lawsuit facilities round RealPage’s YieldStar lease optimization software program, which makes use of an algorithm to advocate pricing primarily based on market knowledge. Schwalb alleges that by feeding knowledge into YieldStar and adhering to its pricing ideas, D.C.’s largest landlords successfully shaped a “cartel” that distorted the market.

One former high-level worker of defendant Greystar Administration Companies admitted landlords used the software program particularly to boost rents in unison, in line with the grievance. It additionally cites inside paperwork exhibiting landlords have been anticipated to intently comply with RealPage’s pricing in practically all circumstances.

This marks the newest authorized motion towards RealPage’s pricing practices, which have confronted rising scrutiny. The Division of Justice opened an antitrust investigation into the corporate final yr following a ProPublica investigation that exposed how YieldStar discourages negotiation and prioritizes excessive occupancy over decrease rents.

RealPage has maintained that it complies with antitrust legal guidelines and that its software program supplies a extra data-driven method to pricing than guide strategies. The corporate didn’t reply to a request for touch upon the D.C. lawsuit.

Among the many defendants are distinguished actual property corporations, together with Greystar, Bozzuto Administration Firm, and Fairness Residential — which collectively personal and handle tens of 1000’s of items throughout D.C. Schwalb argues their coordination inflated rents by “a whole bunch of {dollars} per thirty days” in a metropolis with a well-documented housing affordability disaster.

D.C. had the best median lease of any U.S. metropolis at over $2,100 final yr, in line with census knowledge. The legal professional basic’s grievance estimates the alleged collusion generated over $200 million in extra rental earnings for defendants, depriving renters of honest market costs.

The lawsuit alleges violations of D.C.’s antitrust statutes and will search civil penalties and restitution for D.C. tenants impacted by inflated rents if profitable. It follows an identical price-fixing class motion swimsuit filed towards RealPage and main landlords in California final yr.

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Radek Zielinski

Radek Zielinski is an skilled expertise and monetary journalist with a ardour for cybersecurity and futurology.