Major landlords, RealPage sued in DC for alleged rent-fixing scheme

Washington, D.C., Attorney General Brian Schwalb’s office said Tuesday that it’s suing RealPage, a property management software company, and 14 of the district’s largest landlords for allegedly colluding to raise rents.

The complaint names several publicly traded real estate investment trusts, such as UDR, AvalonBay Communities and Equity Residential.

The companies shared data with RealPage, which then used an algorithm to artificially raise prices for more than 50,000 apartments across the city, costing renters millions of dollars in illegal rent hikes, according to a release from Schwalb’s office. The alleged collusion violates the District of Columbia’s Antitrust Act, the office said.

In a statement to CNBC, a company spokesperson for William C. Smith & Co. said the company does not comment on pending litigation. “In this case to our knowledge we have not received any official court papers and as a result lack any actual information about the specifics of the matter,” the spokesperson said.

A spokesperson for JBG Smith Properties said the company does not comment on ongoing litigation.

Other landlords listed in the lawsuit didn’t immediately respond to a request for comment.

“Defendants’ coordinated and anticompetitive conduct amounted to a district-wide housing cartel,” Schwalb said in a statement. “At a time when affordable housing in D.C. is increasingly scarce, our office will continue to use the law to fight for fair market conditions and ensure that District residents and law-abiding businesses are protected.”

The full complaint can be read here.

RealPage’s price technology is used by more than 30% of apartments in multifamily buildings and more than 60% of apartments in large multifamily buildings across the district, according to the attorney general’s office. The software uses proprietary, nonpublic data and statistical models to estimate supply and demand and generate a price to maximize the landlord’s revenue.

“In seeking to draw a causal connection between revenue management software like ours and increases in market-wide rents, this copycat suit repeats the inaccuracies of predecessor cases,” RealPage spokesperson Jennifer Bowcock said in a statement to CNBC. “The complaint and others like it are wrong on both the facts and the law and we will vigorously defend against it.”

RealPage has previously been sued by renters in the Southern District of California and Tennessee over the past year. The latter lawsuit consolidated more than 20 different suits filed in Seattle, Texas, Boston and other courts.

The landlords listed in the Wednesday complaint allegedly colluded to exchange competitive and sensitive data and adopt the rents set by RealPage’s “Revenue Management” technology, according to the attorney general. The lawsuit alleges the companies transformed the competitive real estate marketplace into one where they worked together at the expense of renters.

The attorney general’s office is also seeking to appoint a corporate monitor to stop any alleged anti-competitive colluding and is seeking financial penalties for the district and residents whose rents were allegedly illegally raised.

The D.C. lawsuit follows a Tuesday decision by a federal jury in Missouri that found the National Association of Realtors and some brokerages, including units of Berkshire Hathaway, liable for conspiring to artificially inflate home sales commissions.

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