Some Landlords Changing How They Set Rents

posted on : November 19, 2024 0 Comment

By John Triplett

Some landlords are changing how they set multifamily rents as a result of the U.S. Department of Justice lawsuit against RealPage alleging price-fixing on rents by landlords.

At the Bisnow Southeast Summit in Atlanta, Kenneth Racowski, an antitrust lawyer and partner at Holland & Knight, said, “Many multifamily companies are moving away from RealPage products, moving away from revenue-management software that uses private information and moving away altogether from revenue management [software].”

Racowski said the issue comes down to whether the information used to establish apartment rents is coming from exclusively public sources. Racowski has helped two multifamily companies get dismissals from charges of price-fixing using algorithmic price-setting software, the Bisnow article says.

“The most conservative risk-mitigation advice is not to use revenue-management software that uses confidential nonpublic information,” Racowski said.

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RealPage has said in response to the lawsuit that its products that use algorithms are legal. RealPage announced earlier this month a feature that allowed users to remove “nonpublic competitor data” from the results.

Several states, including Arizona, have sued RealPage and landlords for price-fixing and conspiring to illegally raise rents for hundreds of thousands of renters.

“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable-housing crisis,” Arizona Attorney General Kris Mayes said in the release earlier this year.

“In the last two years, residential rents in Phoenix and Tucson have risen by at least 30% in large part because of this conspiracy that stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas,” Mayes said. “RealPage and its co-defendants must be held accountable for their role in the astronomical rent increases forced on Arizonans.”

Melissa White, the chair of the board of directors for the Atlanta Apartment Association, an organization representing more than 300 companies managing more than 415,000 apartment units, said during the Bisnow multifamily event that even the methods by which apartment owners conduct basic competitive-market studies are seen as risky by association.

“Something as simple as a market survey that we have been doing forever is now looked at in a negative manner, and it could impact any involvement companies are having related to this issue,” said White, a partner with the Atlanta-based urban mixed-use development firm Perennial Properties.

“It’s definitely a conversation that you should all be having if you don’t have priorities established for 2025,” she told the audience at the event, Bisnow reported.