Yardi’s rent-setting software illegally drove rent prices up for millions of renters: lawsuit | SkipLeadPro
A renter in Seattle last week filed an antitrust class action lawsuit against 18 property management companies, along with property management company software Yardi Systems Inc., accusing them of violating antitrust laws. The plaintiff is accusing the defendants of having orchestrated a nationwide scheme to illegally drive rent growth to unprecedented levels during the pandemic.
By outsourcing the management of rental pricing to RENTmaximiser, Yardi’s rent-setting tool, property management companies failed in complying with the antitrust laws, according to the lawsuit. By 2013, the software was used to price 8 million residential units, attorneys for the plaintiffs argued.
“RENTmaximizer effectively outsources the management of rental pricing from a landlord to Yardi itself, which then implements higher prices collectively across a group of landlords,” the lawsuit alleged. “Defendants who agree to use RENTmaximizer understand that its purpose is to foil the operation of the competitive market.”
This new case is only the latest class action lawsuit filed by a renter who alleges that a rent-setting algorithm helped illegally drive rent growth. It comes on the heels of another case in Tennessee, in which a group of renters accused rental tech firm RealPage of organizing a “cartel” involving some of the country’s biggest landlords.
Additionally, the use of this software prevented landlords from courting would-be renters through the use of different discounts, said the lawsuit. For instance, landlords sometimes offer move-in deals or compete on prices but the use of Yardi’s algorithmic pricing tool disrupted that practice, claimed the attorneys. RENTmaximizer contributed to the rise of higher prices collectively across a group of landlords, hence eliminating the discounts that could have occurred in a competitive market, the lawsuit stated.
Yardi marketed its tools to rental companies as a method to “beat the market” and maximize profits. Meanwhile, it advertised to renters that RENTmaximizer was giving them “complete visibility” into the market, and provided them with “property performance benchmarking,”the lawsuit stated.
Overall, the rate of rent growth has fallen back toward historical norms after nearly two years of historically high growth.