The Lawyer Normal for the District of Columbia (DC) Brian Schwalb announced on Wednesday a lawsuit towards 14 of the town’s largest landlords. The criticism alleges that these landlords colluded with RealPage, a rental administration software program, to artificially inflate rental costs within the metropolis.
In a video assertion printed on his X (previously Twitter) web page, Schwalb likened the conduct of the landlords to a “housing cartel.” In keeping with the criticism, the landlords collectively set hire costs based mostly on RealPage’s expertise. In addition they agreed to unlawfully “alternate competitively delicate information.” If true, the conduct doubtlessly violates the District of Columbia Antitrust Act.
RealPage’s income administration software program allegedly collected personal information from the DC space, then used an algorithm to generate a revenue-maximizing rental value. Apparently, utilizing RealPage’s software program elevated hire income by between two and 7 p.c. By means of communications and written agreements, the landlords agreed to delegate rental value setting to RealPage. Moreover, in keeping with Schwalb, RealPage then enforced compliance with this settlement. When a rental proprietor tried to “override” the RealPage value for the unit, they have been contacted by a RealPage consultant. If the consultant couldn’t “persuade” the proprietor to adjust to the RealPage value, the problem was escalated to larger administration.
The conduct by the events was a marked change from the standard “free market” of rental costs, the place competitors normally drives prices down. Particularly, the Workplace of the Lawyer Normal (OAG) argued that the conduct violates § 28-4502 of the DC Code, which prohibits contract, mixture or conspiracy to restrain commerce.
The allegations by the OAG appear to be corroborated by impartial data, which exhibits a stark improve in rental costs within the DC space during the last a number of years. Lots of the named defendants started utilizing RealPage expertise below 5 years in the past. Between 2021 and 2022, the typical value of a studio condo increased by 23 p.c. The median earnings in that time-frame increased by simply 3.9 p.c. The common value for a studio condo is presently $2,358 per 30 days, which is about half of the typical month-to-month income within the space. The 14 actual property corporations named within the criticism are all massive firms, not simply from DC, however from locations like Houston and Seattle as nicely. The properties of those landlords signify over 58,000 of the out there multi-family housing models.