“Landlords Under Fire: Justice Department Takes Aim at Rent-Hiking Giants”

The U.S. Department of Justice building is visible in Washington, D.C., on Dec. 7, 2024.

Jose Luis Magana/AP

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Jose Luis Magana/AP

DENVER — The U.S. Justice Department has initiated a lawsuit against several major landlords, accusing them of colluding to maintain high rental rates for Americans by utilizing an algorithm to determine rents and discreetly exchanging sensitive information with their rivals to enhance profits.

The legal action comes amid ongoing hardships faced by U.S. renters, who are grappling with a relentless housing market, where incomes are unable to keep pace with rent hikes. Recent data indicates that in 2022, half of American renters allocated over 30% of their income to rent and utilities, marking a record high.

This translates to exhausting, daily choices between medications, groceries, school supplies, and rent. It results in eviction notices and extended legal battles, with children facing the highest rates of eviction, totaling 1.5 million each year, as reported by Princeton University’s Eviction Lab.

Although the housing crisis has been attributed to various factors, including a decline in constructed homes over the past decade, the Justice Department’s lawsuit asserts that significant landlords are contributing to the issue.

The department, in conjunction with 10 states such as North Carolina, Tennessee, Colorado, and California, has accused six landlords managing more than 1.3 million units across 43 states and the District of Columbia of conspiring to refrain from lowering rents.

Greystar Real Estate Partners LLC, one of the defendants, did not respond to a request for comments from The Associated Press but issued an unsigned statement on its website.

“Greystar has always conducted and will continue to conduct its business with the highest integrity. At no point has Greystar participated in any anti-competitive conduct,” the statement declared. “We will robustly defend ourselves in this lawsuit.”

The lawsuit alleges that the landlords have been sharing confidential information regarding rents and occupancy with rival companies through emails, phone calls, or group discussions. The shared information purportedly included renewal rates, their acceptance rate of algorithmic price suggestions, usage of concessions like offering one month free, and even their pricing strategies for the upcoming quarter.

The Justice Department revealed that one of the six landlords has consented to collaborate with prosecutors. The proposed settlement would limit the way the firm can utilize their competitors’ information and algorithms to establish rental prices.

“Today’s action against RealPage and six prominent landlords aims to put an end to their practice of prioritizing profits over people and to make housing more accessible for millions of individuals nationwide,” stated Doha Mekki, the acting assistant attorney general for the department’s antitrust division, in a press release on Tuesday.

Those landlords have been added to an ongoing lawsuit against RealPage, which manages an algorithm that suggests rental prices to property owners. Prosecutors allege that the algorithm employs sensitive competitive data, enabling landlords to synchronize their prices and sidestep competition that would typically drive rents down.

Jennifer Bowcock, RealPage’s senior vice president for communications, stated in a message to the AP that their software is utilized on fewer than 10% of rental units in the U.S., and that their price suggestions are implemented less than half the time.

“It’s time to cease scapegoating RealPage — and now our clients — for issues surrounding housing affordability when the fundamental cause of elevated housing costs is the insufficient supply of housing,” Bowcock remarked.