Legal pressure is mounting on a property-management software company, RealPage, facing allegations that it illegally fixes apartment rent prices at buildings across the U.S….The Justice Department  has opened a criminal investigation into the company, according to people familiar with the matter….RealPage’s algorithmic pricing system analyzes huge troves of information about the apartment rental market. It then recommends to landlords how much to increase rent for each lease renewal, or what to ask for newly vacated apartments. At issue is whether the use of this pricing system amounts to an illegal rent-setting cartel among landlords, artificially boosting the rents paid by apartment tenants over many years. 

Arizona Attorney General Kris Mayes alleges that, in Phoenix and Tucson, RealPage pooled nonpublic pricing data from competing building owners, then fed the data into an algorithm that told landlords to push rents higher than they might have otherwise. RealPage then discouraged landlords from deviating from the algorithm’s suggested rents, according to the attorney general’s filing.“There is no competitive rental market in Arizona anymore, ” Mayes said in an interview. “Because RealPage sets the price.”

Texas-based RealPage was founded in 1998. It acquired the YieldStar pricing platform from publicly traded landlord Camden Property Trust in 2002. Private-equity firm Thoma Bravo purchased RealPage in 2021 for nearly $10 billion.  Federal charges could prove disastrous not only for RealPage but also for the many landlords and property managers who use its technology. That includes some of the largest real-estate companies on Wall Street. 

Excerpts from Will Parker, Alleged Rent-Fixing of Apartments Nationwide Draws More Legal Scrutiny, WSJ, Apr. 15, 2024