The DOJ is reportedly investigating rent-setting software company RealPage

The Division of Justice’s Antitrust Division has reportedly opened up an investigation into RealPage, the actual property know-how firm accused of contributing to higher-than-normal lease costs. In keeping with a report from ProPublica, the DOJ is wanting into whether or not the corporate’s rent-setting software program permits landlords to coordinate and lift lease throughout the nation.

This comes after final month’s report from ProPublica, which revealed that RealPage’s YieldStar software program makes use of an algorithm to “assist landlords push the very best doable rents on tenants.” As famous by ProPublica, YieldStar’s algorithm makes use of the private rental charges gathered from the landlords and property managers which might be its shoppers. YieldStar then repackages that info in an anonymized kind to make rental charge suggestions to its customers, not directly giving landlords entry to their opponents’ pricing.

ProPublica’s report states that the algorithm’s design has “raised questions amongst actual property and authorized consultants about whether or not RealPage has birthed a brand new sort of cartel that enables the nation’s largest landlords to not directly coordinate pricing, doubtlessly in violation of federal regulation.” These consultants have additionally raised considerations with the RealPage consumer group, a web-based discussion board that lets house managers who use the service talk with each other.

Lease costs have elevated by 20 p.c since early 2020, based on The New York Occasions. Whereas knowledge from House Checklist signifies that rental costs have decreased barely over the previous couple of months, it’s nonetheless up by 5.7 p.c yr over yr, and a report from CNBC signifies that lease costs will proceed to development upward via 2023. RealPage is reportedly conscious that its software program helps to drive up lease, ProPublica stories, and it discourages landlords from negotiating with tenants.

In 2017, the DOJ requested extra info from RealPage when the corporate introduced its plans to accumulate Rainmaker Group, a competing actual property software program firm that created the rent-setting software program, Lease Lease Choices (LRO). In keeping with ProPublica, Steve Winn, RealPage’s CEO on the time, mentioned the $300 million acquisition would permit the service to extend the variety of models it priced from 1.5 million to three million.

A number of US lawmakers have already referred to as on federal businesses to look into ProPublica’s findings. Senators Amy Klobuchar (D-MN), Richard Durbin (D-IL), and Cory Booker (D-NJ) wrote a letter to US assistant lawyer basic Jonathan Kanter, to specific their considerations about RealPage, noting that the “charge setting software program primarily quantities to a cartel to artificially inflate rental charges in multifamily residential buildings.” Klobuchar later sent out a tweet stating that she’s “asking the DOJ to research.”

In the meantime, 17 representatives, together with Jesús García (D-IL), Jan Schakowsky (D-IL), Cori Bush (D-MO), Alexandria Ocasio-Cortez (D-NY), Pramila Jayapal (D-WA), and others adopted up with a letter urging the Federal Commerce Fee and Division of Justice to research RealPage. “Our constituents can’t afford to have anticompetitive — and doubtlessly per se unlawful — practices drive up costs for important items and providers at a time when a full-time, minimum-wage wage doesn’t present a employee sufficient cash to lease a two-bedroom house in any metropolis throughout this nation,” the lawmakers wrote.

Senators Bernie Sanders (D-VT) and Elizabeth Warren (D-MA) additionally posed quite a few inquiries to RealPage CEO Dana Jones final week, and are giving RealPage till December 1st to reply. Moreover, RealPage is dealing with quite a few class motion lawsuits accusing the corporate of elevating lease. The DOJ nor RealPage instantly responded to The Verge’s request for remark.