BERKELEY, CALIF. — RealPage has filed a lawsuit against the city of Berkeley, California, over an impending ban on the use of rent pricing algorithms. The firm is seeking a judgment and injunction against the ordinance, which RealPage argues violates the First Amendment right to lawful speech. The company also asserts that the ordinance was adopted based on false claims regarding its revenue management software.
The Berkeley City Council voted to ban rent pricing software on March 25. The ordinance will go into effect on April 24, unless it is enjoined by the court.
The ordinance prohibits the sale of or use of algorithmic technology to set rents or manage occupancy levels for rental properties. The city council states that the software is increasing rents and vacancy rates by allowing landlords to collude on pricing decisions.
Last August, the Department of Justice (DOJ) filed an antitrust lawsuit against RealPage, arguing that the company’s practices — such as proprietary data sharing among subscribers to suggest rental rates and terms — constituted a form of price fixing. While the DOJ has ended its criminal investigation into the pricing practices of the rental housing industry, the civil suit remains ongoing.
As of April 9, four cities in the United States have banned rent pricing software. Philadelphia, San Francisco and Minneapolis have adopted similar ordinances. According to a variety of sources, cities such as Portland, Oregon; Providence, Rhode Island; San Diego; and New York City are considering similar legislation. State legislatures in Colorado and Washington have also introduced bills to prohibit the use of rent pricing algorithms.
RealPage has denied allegations of price fixing and has continuously defended its practices. The company asserts that the real driver of high rents is a lack of housing supply.
“It’s disappointing the City of Berkeley has adopted legislation based on misinformation that will have a long-lasting and detrimental effect on housing in their community and will ultimately stifle innovation,” says Dana Jones, CEO and president of RealPage. “Rather than pursue misguided ordinances, we encourage California’s public leaders to focus on the real issue — the lack of housing supply. Until then, we must take legal action to defend the critical role technology plays in supporting a healthier housing ecosystem.”
RealPage is a real estate software company based in Richardson, Texas, which is located about 15 miles north of Dallas. Founded in 1998, RealPage provides property management software for roughly 24 million rental units across North America, Europe and Asia.