A group of U.S. renters alleges that their landlords are utilizing software to impose inflated rent increases. Kevin Weller, a tenant at Portside Towers since 2021, claims that employees of Equity informed them that the software eliminates empathy from rent calculations, allowing them to charge whatever the software dictates.
According to tenants, the management substantially raised prices after offering concessions during the Covid-19 pandemic. In response, a group of tenants from a 527-unit building in Jersey City, New Jersey, is part of a class-action lawsuit against RealPage and 34 co-defendant landlords. The U.S. Department of Justice has expressed interest in the case, asserting violations of the Sherman Antitrust Act.
In a similar vein, the attorney general of Washington, D.C., filed a complaint against RealPage and 14 landlords managing over 50,000 apartment units in the District. The complaint alleges that RealPage facilitates a housing cartel, with landlords obliged to follow RealPage’s pricing suggestions, limiting their independent decision-making.
RealPage contends that its revenue management tools use anonymized, aggregated data to provide pricing recommendations for approximately 4.5 million housing units in the U.S. While the company claims its tools can boost landlord revenues, critics argue that the software may lead to artificially high rents. RealPage asserts that landlords are not obligated to accept its pricing suggestions and charges a fixed fee for each apartment unit managed with its software.
The controversy surrounding RealPage emerged after renters read a 2022 ProPublica investigation, revealing how revenue management software is employed in real estate. Equity Residential, whose affiliates are involved in the lawsuit, experimented with Lease Rent Options from 2005 to 2008, and RealPage acquired the product in 2017.
Renters affected by landlord pricing practices have taken legal action, with Equity Residential affiliates challenging a housing authority decision in Jersey City. Despite declining to comment on the ongoing RealPage litigation, analysts observe fluctuations in asking rents across the U.S., emphasizing the potential pricing power of well-located landlords amid varying rates of home construction on the East Coast.
