FBI Investigating Rent Price-Fixing 'Cartel' (video)
Arizona Attorney General Kris Mayes is investigating nine corporate landlords for alleged rent price fixing. Now the FBI is involved.
Exactly two months ago, I celebrated Arizona Attorney General Kris Mayes for taking on nine major corporate landlords for alleged rent “price fixing” through an online platform called RealPage.
This week, BIG by Matt Stoller published Monopoly Round-Up: FBI Raids Big Corporate Landlord Over Nationwide Rent Hikes.
This is great news for renters. The allegation is that the landlords gave non-public data to RealPage, and the software set non-competitive rents based upon former renters’ personal data and renting habits. RealPage also used aggressive marketing tactics to encourage landlords to pump up the rent.
The FBI raided the Atlanta offices of Courtland Management, which rents 85,000 apartments across 13 states, Stoller reports. His article includes a very revealing map of Atlanta showing a high concentration of apartment complexes whose rents were set by RealPage software.
Stoller writes …
Landlords adopt RealPage recommendations on pricing 80-90% of the time, which explicitly drives up revenue by holding apartments off the market. As the architect of RealPage once explained, “[i]f you have idiots undervaluing, it costs the whole system.” It’s not just an information-sharing and price recommendation engine. RealPage has ‘pricing advisors’ that monitor landlords and encourage them to accept suggested pricing, it works to get employees at landlord companies fired who try to move rents lower, and it even threatens to drop clients who don’t accept its high price recommendations. This one’s a very clear conspiracy. Allegedly.
Cortland is located in Atlanta, where 81% of multifamily rental unit prices are set via software. And rent in that city has exploded, up 80% since 2016. What’s odd about this price increase is that vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t. What seems to have happened in the period between 2015-2017 is that a bunch of landlords started using RealPage pricing recommendations. Then in 2017, RealPage bought its main rival, Lease Rent Option, giving it perfect information into the supply and demand for apartment rentals.
Stoller added that there is a civil antitrust suit in Tennessee that involves RealPage and “at least 21 large landlords and institutional investors, encompassing 70% of multi-family apartment buildings and 16 million units nationwide, to systematically push up rents.” I highly recommend reading the whole article here and becoming a subscriber to BIG, a highly informative Substack.
Legal action on rent price fixing has direct implications for Tucson because two of the corporate landlords Mayes is investigating have apartment complexes in Tucson — HSL Properties and Greystar Management Services. The Tucson Sentinel has a lot of details in AG Sues Tucson’s HSL Properties, 8 Other Ap’t Landlords over RealPage Rent ‘Price-fixing’.
I Experienced Continuous Rent Increases in Phoenix
I saw rent price fixing in Phoenix first hand. When I was an out-of-town representative in the Arizona House for six years, I was also a Phoenix renter.
Because Legislators make only $24,000 per year and the per diem increase (which covers out-of-towners’ actual living expenses) had not passed yet1, I had to move in and out of six apartments in six years2.
Every year, the rents went up about the same amount. Fees, on the other hand, were all over the place — like the valet garbage fee, the “smart apartment” fee3, the six-month lease fee, the first floor apartment fee4 and of course, the utility hook-up fees and deposits, a pet fee, a parking fee5 and more. Most of the fees were non-refundable, non-negotiable and non-transparent on the apartment complex’s website.
As a renter, I became increasingly disgruntled with the ever-rising rent and the dang fees. Check out my article Big Banks, Big Insurance, Big Pharma & Big Housing: Corporate America Is Burying Us in Fees. Ticketmaster isn’t the only corporation overcharging fees.
After signing several 50-page corporate leases, I realized the leases were designed to facilitate evictions. They were full of gotcha clauses. For example, in a state that has had legal medical marijuana for more than 10 years and recreational weed since 2020, it should not be illegal to use any cannabis — including edibles — in apartments in Arizona. The way the leases are written now, a cancer patient consuming cannabis gummies could be evicted from their apartment for that reason alone. Read more about keeping people housed in To Fix Housing Crisis: Focus on Ending Preemption & Keeping People Housed (video).
I would love to see an Arizona map — like the Atlanta map — showing the apartment complexes that use RealPage to set their rent. This is totally doable. Mayes likely has the address data for the complexes owned by the nine landlords she is investigating. One picture is worth 1000 words.
Movement against these large corporate landlords is a big deal for renters nationwide.
I believe the states should band together and do a joint lawsuit — like the historic lawsuit by the states’ attorneys general against the tobacco industry. A whistleblower leaked documents showing tobacco companies were purposefully increasing nicotine doses to keep people addicted. (Check out The Insider, a 1999 movie about the whistleblower.)
Price fixing rents nationwide is the same scope of fraud and public harm as the nicotine scandal. How many people were evicted because they couldn’t pay the rent and the exorbitant, unnecessary fees? Or lost their apartments because the rent doubled when the complex was sold? Or got booted out because they smoked a joint or ate a cannabis brownie?
We need transparency in leasing, better tenant landlord laws and consumer protection. Thank you, Kris Mayes, for being the first Arizona attorney general since Terry Goddard to work for the people and not the corporations.
Being a Renter in Phoenix (2016-2022)
I posted this video with my March 4 article AG Mayes Takes on Rent Price Fixing in Arizona (video). Both the article and the video talk a lot about leases, fees and transparency. They also include a lot of photos from the six dinky, expensive apartments I rented.
The per diem raise for out-of-Maricopa-County Legislatures took effect during my last year in the House, 2022. It was a game-changer for the per diem to cover my actual costs to rent an apartment for six months in Phoenix and to cover travel accommodations for interim meetings. BTW, the per diem is taxable.
Readers who have been following my vanlife Substack articles may recognize the van curtains and pillow covers were once sofa throws and pillows in my Phoenix apartments.
The Smart Apartment fee was sold as a convenience. Tenants were encouraged to sign up for the Smart Apartment app which allowed them use their smart phones to get into their apartments — instead of using a real key. (What happens if your phone battery is dead at the end of the day?) There were sensors everywhere in the apartment — measuring the tenants’ behavior and utility use. There was a clause in the lease stating that stated an unnamed third party vendor was allowed to collect tenant data, store, use and sell it. I was not allowed to get out of the Smart Apartment fee, but I never downloaded in the app. It was difficult to set the thermostat manually, but I figured it out.
I think the second floor people should get a discount in a building with outside steps and no elevator. I expected my rent to be what it said on the website.
At some apartment complexes, there were parking fees but no assigned spaces and not enough parking for one space per apartment. Several times when I lived at the Clarendon and the Shorewood, I came home after dark from the Legislature, parked outside the gate down the street and walked in the dark carrying my purse, computer and briefcase. That’s not safe. Tucson is allowing apartment complexes have less than one parking space per unit.
Racket is right - OMFG. I had no idea things were this ridiculous.