Four US senators are asking the Justice Department to take a close look at how software from Richardson-based RealPage is being used by large property owners.
Democratic Senators Elizabeth Warren, Tina Smith, Bernie Sanders and Ed Markey sent a letter on March 2 to Assistant Attorney General Jonathan Kanter about their concerns about the role that algorithmic rent-setting software such as RealPage’s YieldStar is playing in the pricing of rental properties.
The letter comes after ProPublica published an investigation into owners’ use of RealPage software in October. In November, the Justice Department opened an investigation into whether RealPage is facilitating collusion among property owners, as questions were raised about a 2017 merger between RealPage and its biggest price competitor, ProPublica reported.
“The rise of institutional investors and rent-setting algorithms have weakened competition in the already tense housing market, resulting in substandard services and unnecessarily high housing costs for American families,” the senators wrote. “Therefore, it is essential that the department use all of its tools to ensure that tenants do not fall victim to corporate landlords and anti-competitive forces.”
The senators opened their own investigation into YieldStar in November, requesting information on how rent-setting software has affected the rental housing market.
They said the company did not provide them with all the information they requested, but noted that RealPage’s website claims its revenue management software is used for more than 4 million units and takes into account leasing transaction data from more than 13 million units.
The senators wrote that the information provided to them by RealPage also revealed that YieldStar use has been most prevalent in some of the regions most targeted by corporate buyers and with the highest rent increases.
“Even the widespread use of your anonymous and aggregated rental data by the nation’s largest landlords could result in those companies setting de facto prices, driving up prices and hurting tenants,” the senators wrote. “Given these findings, the DOJ should act to protect American families and closely review rent-setting algorithms like YieldStar to determine whether they have anti-competitive effects in local real estate markets that have seen increased activity from institutional investors.”
RealPage went public more than a decade ago in a stock sale valued at $135.3 million. It was acquired and taken private by private equity investment firm Thoma Bravo in a $10.2 billion deal in 2021.
In a statement provided to The News in response to the senators’ letter, RealPage said: “RealPage appreciates the opportunity to work with the senators’ offices and, more generally, we are always willing to engage stakeholders in the policy to ensure an informed and comprehensive understanding of the benefits we bring to the rental ecosystem.”
Senior Deputy Attorney General Doha Mekki told an antitrust conference in Miami in February that the Justice Department’s antitrust division was withdrawing guidance issued between 1993 and 2011 outlining permissible conduct related to information sharing, Bloomberg Law reported.
“This guidance provided a safe harbor for companies like RealPage, and we now know, based on the findings of our investigation, that the safe harbor may have provided potential opportunities for de facto collusion and price fixing,” the senators wrote in their letter. .
According to Bloomberg Law, Mekki said the increased use of algorithms, the speed of data and the ability of companies to de-anonymize sensitive information require new scrutiny.
2023 The Dallas Morning News.
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Citation: Senators Urge Justice Department to Examine Landlords’ Use of RealPage Software to Raise Rents (March 9, 2023) Accessed March 11, 2023 at https://techxplore.com/news/2023- 03-senators-urge-doj-scrutinize-landlords. html
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