6 major landlords accused of scheming to keep rents high, DOJ says

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FILE - For rent sign outside of a cottage in Falmouth, Cape Cod, Massachusetts. (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

WASHINGTON - As U.S. renters struggle in a merciless housing market, several large landlords are being sued by the Justice Department for allegedly coordinating to keep Americans’ rents high.

The landlords are accused of using both an algorithm to help set rents and privately sharing sensitive information with their competitors to boost profits, according to a statement shared Tuesday by the Justice Department. 

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The lawsuit comes as U.S. incomes have failed to keep up with rent increases. The latest figures show that half of American renters spent more than 30% of their income on rent and utilities in 2022, an all-time high. That means decisions between medication, groceries, school supplies and rent for many, as well as eviction notices.

The Justice Department is suing, along with the attorneys general of California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee and Washington. 

The six landlords, which collectively operate more than 1.3 million units in 43 states and the District of Columbia, are accused of scheming to avoid lowering rents.

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

"Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices," the statement read. "We will vigorously defend ourselves in this lawsuit."

What are the landlords accused of in the lawsuit? 

The lawsuit accuses the landlords of sharing sensitive data on rents and occupancy with competing firms via email, phone calls or in groups. 

The information shared allegedly included renewal rates, how often they accept an algorithm's price recommendation, the use of concessions such as offering one month free, and even their approach to pricing for the next quarter.

One of the six landlords agreed to cooperate with prosecutors, according to the Justice Department. The proposed settlement would restrict how the company can use their competitors' data and algorithms to set rents.

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

Those landlords were added to an existing lawsuit against RealPage, which runs an algorithm that recommends rental prices to landlords. 

Prosecutors say the algorithm uses sensitive competitive information, allowing landlords to align their prices and avoid competition that would otherwise push down rents.

What is RealPage saying?

Jennifer Bowcock, RealPage's senior vice president for communications, said in a statement to the AP that their software is used on fewer than 10% of rental units in the U.S., and that their price recommendations are used less than half the time.

"It’s past time to stop scapegoating RealPage — and now our customers -- for housing affordability problems when the root cause of high housing costs is the under-supply of housing," Bowcock said.