FBI Raids Corporate Landlord in Major Rent Price-Fixing Probe

The Federal Bureau of Investigation (FBI) conducted an unannounced raid on the Atlanta headquarters of Cortland Management on Wednesday, May 22, marking  a significant escalation in a criminal antitrust investigation by the U.S. Department of Justice (DOJ) into allegations of a nationwide conspiracy to artificially inflate apartment rents. The implications of this probe are far-reaching, potentially affecting millions of renters across the United States.

At the center of this investigation is RealPage, a software and consulting firm accused of helping orchestrate price-fixing among large corporate landlords. RealPage’s system, which provides rental price recommendations based on real-time data from landlords, is alleged to be a key tool in manipulating the rental market. The firm’s influence covers 70% of multifamily apartment buildings and impacts 16 million units nationwide.

The scheme purportedly operated by encouraging landlords to adopt RealPage’s pricing recommendations, a practice they follow 80-90% of the time. This coordinated approach reduces the availability of rental units, driving up prices. One of the architects of RealPage’s system reportedly stated that the aim is to prevent landlords from undervaluing their properties, ensuring consistently higher rents across the board.

The impact of such practices is particularly evident in Atlanta, where software-driven pricing affects 81% of multifamily rental units. Since 2016, rents in the city have surged by 80%, despite rising vacancy rates that would typically result in lower rents. The widespread adoption of RealPage’s pricing recommendations by several landlords between 2015 and 2017, followed by RealPage’s acquisition of its main rival, Lease Rent Option, in 2017, has given the company unprecedented control over rental pricing.

For renters, the implications of this investigation are significant. If the allegations are proven true, the artificially inflated rents have placed undue financial burdens on millions of tenants, with the findings of this probe possibly leading to changes in how rents are set and regulated.

Source: Bis Now