Lawsuits Mount Over Software Used by Landlords to Set Rents

Imagine a system that lets big landlords in your city work together to raise rents, using detailed, otherwise-private information about what their competitors are charging.

Such a system is already underway, according to a series of lawsuits filed by tenants and prosecutors across the country. The plaintiffs argue that real estate software from a company called RealPage is being used by apartment owners to increase rents.

Through the Texas-based company’s YieldStar product, plaintiffs say, landlords share rental pricing data and occupancy rates — information the company funnels through algorithms to spit out a suggestion for what landlords should charge renters. Those figures are often higher than they would be in a competitive market.

In a vast majority of cases, landlords adopt the suggested prices, passing the costs on to tenants, the plaintiffs assert. RealPage, owned by the private equity firm Thoma Bravo, advertises its software to landlords as a tool that can help them outperform the market by 3 to 7 percent.

RealPage has denied that it facilitates collusion through its software. In a statement on its website in June, the company blamed “a host of complex economic and political forces,” including an undersupply of rental housing units, for rent increases nationwide.

A company spokeswoman, Jennifer Bowcock, said by email that the lawsuits were based on a fundamental misunderstanding of how revenue management software works. The software often recommends rent reductions, she added.