Once again, large property management firms across the country are facing allegations that their use of rental pricing software amounts to illegal price-fixing that drives up costs for tenants.
Attorneys filed an antitrust lawsuit Friday on behalf of a Seattle renter alleging that 18 property managers across the country use a software known as RENTmaximizer from the California company Yardi Systems to trade otherwise private information and inflate rents. The claims are similar to those filed against another software company, RealPage, late last year.
The RENTmaximizer case, filed in the U.S. District Court for the Western District of Washington, seeks class-action status.
Kirkland-based Calibrate Property Management, Bellevue-based HNN Associates and Seattle-based Pillar Properties are among the property management companies named in the case, along with Yardi. The companies use the RENTmaximizer software and manage more than 4,000 units, according to the suit.
Yardi and the three Washington companies did not respond to requests for comment Friday.
Similar to the claims regarding RealPage, the suit claims competing property managers submit “detailed, competitively sensitive, and non-public information about current supply, production, and pricing plans regarding leasing” to the RENTmaximizer software — knowing that their competitors do the same — then use the software to set rents.
“Our antitrust legal team has uncovered what we believe to be a clear gaming of the system through controlled, lockstep algorithmic increases to fix the cost of rent — one that has affected millions of renters,” Steve Berman, one of the Seattle attorneys bringing the case, said in a statement. “Housing is a basic human need. What these companies have done is both legally and morally bankrupt.”
Yardi launched RENTmaximizer in 2011 and by 2013 said the software was in use at 8 million units, “a number that is likely far higher today,” the lawsuit says.
Without the software, the lawsuit alleges the companies would set rents based on demand in the market.
“In the absence of knowledge about competitors’ pricing strategies, property managers can only make their best educated guesses and set their prices at optimal positions — usually a bit lower than what [is] offered by competitors — to attract renters in the market,” the suit says.
In public-facing materials, Yardi has promised to increase property revenues by 3% to 6% and allow property managers to “beat the market,” according to the suit. Lawyers say their own analysis found that rents in areas with high usage of RENTmaximizer averaged 6% higher than rents for comparable apartments in other areas.
The lawsuit points to a 2015 news release in which Philip Nored, then the owner and managing partner at Bellevue-based HNN, said, “RENTmaximizer has taken the guesswork out of our rental pricing and lease terms, and boosts pricing performance through an intelligent system of measurements, fixed factors and discipline.” An online post from Yardi highlights Seattle-based Pillar Properties’ use of various Yardi products, including RENTmaximizer, to “drive higher revenue, manage costs and balance risk.”
A ProPublica investigation last year raised antitrust concerns about RealPage. Attorneys nationwide filed dozens of lawsuits against RealPage, including several in Seattle. Those cases have since been consolidated in a federal court in Tennessee.
