Landlords will face new restrictions on the use of rent-pricing software following a settlement between RealPage Inc. and federal prosecutors. The Department of Justice (DOJ) announced the agreement after a yearlong antitrust lawsuit against the Texas-based company, which developed software used by landlords to set rental prices for apartments.
The DOJ argued that RealPage’s software allowed landlords to coordinate their pricing using confidential data, leading to higher rents for tenants. “RealPage was replacing competition with coordination, and renters paid the price,” said DOJ antitrust chief Gail Slater. She noted that the settlement avoids a lengthy and expensive trial.
Under the proposed terms, RealPage can no longer use real-time confidential data to generate rent recommendations. The only nonpublic data permitted for training its algorithm must be at least one year old. In a video statement, Slater explained, “What does this mean for you and your family? It means more real competition in local housing markets. It means rents set by the market, not by a secret algorithm.”
RealPage will not have to pay damages or admit wrongdoing as part of the settlement, which still requires judicial approval.
Stephen Weissman, an attorney for RealPage, responded positively to the outcome: “There has been a great deal of misinformation about how RealPage’s software works and the value it provides for both housing providers and renters,” he said. “We believe that RealPage’s historical use of aggregated and anonymized nonpublic data, which include rents that are typically lower than advertised rents, has led to lower rents, less vacancies, and more procompetitive effects.”
In recent months, over two dozen property management companies have settled cases related to their use of RealPage’s technology. Greystar, identified as the largest landlord in the country, agreed to pay $50 million in a class action settlement and an additional $7 million in another case brought by nine states.
States such as California and New York have enacted laws aimed at regulating rent-setting software. Several cities—including Philadelphia and Seattle—have also passed ordinances targeting these practices.
