Corporate landlords are being sued by U.S. renters.

• In the United States, large landlords are being sued by a group of individuals for allegedly setting the market rate of rent through price-fixing.
• RealPage, a real estate software provider, is accused of facilitating the sharing of competitively sensitive data among 14 landlords in Washington D.C., as alleged in a complaint filed by the district's Attorney General.
• RealPage recommends prices for roughly 4.5 million housing units in the United States
• CNBC reported that RealPage stated that its landlord clients are not obligated to follow their price recommendations.

U.S. renters claim their landlords are inflating rent increases through software usage.

According to Kevin Weller, a tenant at Portside Towers since 2021, employees of Equity have informed us that the software they use removes empathy from the decision-making process, allowing them to charge whatever the software suggests.

Tenants in a 527-unit building in Jersey City, New Jersey, have filed a class-action lawsuit against RealPage and 34 co-defendant landlords, alleging that the management started to increase prices substantially after giving renters concessions during the Covid-19 pandemic. The U.S. Department of Justice filed a statement of interest in the case in December 2023, arguing that the complaints adequately allege violations of the Sherman Antitrust Act.

In November 2023, the attorney general of Washington, D.C., filed a complaint against RealPage and 14 landlords who collectively manage more than 50,000 apartment units in the District. The complaint alleges that landlords share competitively sensitive data through RealPage, which sets artificially high rents on a key slice of the local rental market.

According to Schwalb, landlords in D.C. are required, under their agreement with RealPage, to charge what RealPage determines the market demands for filling vacant units, rather than making independent decisions.

RealPage claims that its revenue management solutions utilize anonymized, aggregated data to provide pricing recommendations for approximately 4.5 million housing units in the U.S. The company asserts that its tools can boost landlord revenues by 2% to 7%.

YieldStar, one of RealPage's revenue management tools, can optimize a property manager's portfolio yield by balancing prices, occupancy, and lease lengths. The software feeds data from its models into a newer tool called "AIRM," which considers the impact of credit, marketing, and leasing effectiveness. RealPage's landlord customers are not obligated to take their price suggestions, and the company charges a fixed fee on each apartment unit managed with its software.

In 2021, Miami-based private equity firm Thoma Bravo acquired RealPage for $10.2 billion. However, in court filings, Thoma Bravo has argued that it is not responsible for the actions of its subsidiary as outlined in class-action complaints by plaintiffs.

Renters informed CNBC that they learned about revenue management software in real estate through a 2022 ProPublica investigation. Equity Residential investor materials reveal that the company began testing Lease Rent Options between 2005 and 2008. RealPage acquired the product in 2017.

Harry Gural, a tenant in an Equity Residential property in Washington, D.C.'s Van Ness neighborhood, has been involved in legal disputes with his landlord over pricing practices for over seven years.

Equity Residential and other landlords are challenging a decision made by a local housing authority in Jersey City regarding prices set on the Portside Towers property. The company has filed a lawsuit in federal court, stating that the decision could result in millions of dollars in refunds for tenants. Meanwhile, Redfin reports that asking rents in the U.S. ticked down to $1,964 a month in December 2023, a decline from recent highs. Prices are coming down in markets such as Atlanta and Austin, Texas, where home construction is high. However, analysts believe low rates of homebuilding on the U.S. East Coast could give well-located landlords more pricing power. In a June 2023 interview with CNBC, Equity Residential CEO Mark Parrell stated that the company is still in a good spot, with 80,000 well-located apartments. Watch the video above to learn about the rising tide of lawsuits against U.S. corporate landlords.

The previous article contained an error regarding the purchase date of Portside Towers by Equity Residential.