Washington D.C.’s Lawyer Common 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 line with a Nov. 1 ArsTechnica report, the civil criticism accuses the landlords of conspiring with RealPage, a Texas-based supplier of hire pricing software program, of fixing rental charges above truthful market worth. It claims the alleged scheme affected over 30% of house buildings with 5 or extra models and 60% of buildings with 50 or extra models 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 hundreds of thousands of {dollars} above truthful market costs,” stated Schwalb.
The lawsuit facilities round RealPage’s YieldStar hire optimization software program, which makes use of an algorithm to advocate pricing based mostly on market knowledge. Schwalb alleges that by feeding knowledge into YieldStar and adhering to its pricing ideas, D.C.’s largest landlords successfully fashioned a “cartel” that distorted the market.
One former high-level worker of defendant Greystar Administration Providers admitted landlords used the software program particularly to lift rents in unison, in line with the criticism. It additionally cites inner paperwork displaying landlords had been anticipated to intently comply with RealPage’s pricing in almost all instances.
This marks the most recent authorized motion towards RealPage’s pricing practices, which have confronted rising scrutiny. The Division of Justice opened an antitrust investigation into the corporate final 12 months 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 offers a extra data-driven strategy 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 hundreds of models throughout D.C. Schwalb argues their coordination inflated rents by “lots of of {dollars} per 30 days” in a metropolis with a well-documented housing affordability disaster.
D.C. had the best median hire of any U.S. metropolis at over $2,100 final 12 months, in line with census knowledge. The legal professional normal’s criticism estimates the alleged collusion generated over $200 million in extra rental revenue for defendants, depriving renters of truthful 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 analogous price-fixing class motion go well with filed towards RealPage and main landlords in California final 12 months.
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