The US Justice Department has filed a lawsuit against six major landlords for allegedly colluding to artificially keep rental prices high through the use of algorithms and sharing sensitive information with competitors.
The lawsuit has come at a time when many American renters are facing challenges due to escalating rental costs that surpass income growth, leading to a situation where over half of renters spend more than 30% of their income on rent and utilities.
The big picture: Major landlords, controlling over 1.3 million units across 43 states and the District of Columbia, are accused of avoiding lowering rents despite contributing to the housing crisis, which is already exacerbated by factors like a lack of new home construction.
- One of the accused landlords, Greystar Real Estate Partners LLC, released a statement denying involvement in anti-competitive practices and asserting its commitment to integrity while vowing to defend against the lawsuit.
- The landlords are alleged to have shared sensitive data on rents, occupancy rates, acceptance of algorithm-based pricing, and concessions like free rent months with other firms through various means such as emails, phone calls, and group communications.
Go deeper: The Justice Department is seeking to enforce changes that would restrict how landlords can use competitors’ data and algorithms to set rental prices, aiming to create a more affordable housing market.
- RealPage, a company running a pricing algorithm for landlords, is also implicated in the lawsuit for allegedly providing a platform that enables landlords to align rental prices to avoid competitive pressures that would naturally lower rents.
