The US Department of Justice accuses six major property owners of scheming to keep rents high

The US Department of Justice is suing several large landlords for allegedly coordinating to keep Americans’ rents high by using an algorithm to set rents and privately sharing confidential information with competitors to increase profits.

The lawsuit comes to court as U.S. renters continue to struggle in an unforgiving housing market and as incomes fail to keep up with rent increases. The latest data shows that half of U.S. renters spent more than 30% of their income on rent and utilities in 2022, an all-time high.

This means grueling daily decisions about medications, groceries, school supplies and rent. This means eviction notices and lengthy court cases where children face the highest rates of eviction – 1.5 million children are evicted each year, according to Princeton University’s Eviction Laboratory.

While several causes have been attributed to the housing crisis, including a collapse in the number of homes built over the past decade, the Justice Department’s lawsuit said major property owners play a major role.

The department, along with 10 states including North Carolina, Tennessee, Colorado and California, is accusing six landlords who collectively operate more than 1.3 million apartments in 43 states and the District of Columbia of scheming to avoid rent reductions.

The owner of Greystar Real Estate Partners LLC, a defendant in the case, declined a request for comment from The Associated Press but posted an unsigned statement on its website.

“Greystar has and will continue to conduct its business with the utmost integrity. “Greystar has not engaged in any anti-competitive practices at any time,” the statement said. “We will defend ourselves vigorously in this lawsuit.”

The lawsuit accuses landlords of sharing sensitive rent and occupancy data with competing companies via email, phone calls or in groups. The information shared allegedly included renewal rates, how often the algorithm accepted pricing recommendations, the use of concessions such as offering one month free, and even the pricing approach for the next quarter.

The Justice Department said one of the six owners agreed to cooperate with prosecutors. The proposed agreement would limit the company’s ability to use competition data and algorithms to set rental rates.

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

These landlords have been added to an existing lawsuit against RealPage, which uses an algorithm that recommends rental prices to landlords. Prosecutors say the algorithm uses sensitive competitive information, allowing landlords to adjust prices and avoid competition that would otherwise drive down rents.

Jennifer Bowcock, RealPage’s senior vice president of communications, said in a statement to the AP that their software is used in less than 10% of U.S. rental properties and that pricing recommendations are used less than half of the time.

“It’s time to stop making RealPage – and now our customers – the scapegoat for housing affordability issues when the main reason for high housing costs is undersupply,” Bowcock said.