Berkeley properties managed by Greystar included in $7 million settlement over rent-fixing

By Amanda Hari

America’s largest landlord, Greystar, is facing consequences after the real estate giant was accused of colluding to increase rent prices in the Bay Area and in other states.

A multistate antitrust lawsuit claims the company was illegally using algorithmic software sold by RealPage to share proprietary data to align prices with other property managers and push up rents.

“It’s absolutely important that we hold landlords accountable for this type of action,” said Matthew Lewis, secretary of the Berkeley Tenants Union.

Greystar Management Services LLC has six apartment complexes in Berkeley. When Lewis looked for his own apartment to rent, he said he stayed away from companies like Greystar.

“I had to do a lot of work to find this,” said Lewis of what it took to acquire an affordable apartment. “It would be much, much more difficult if landlords were using companies like RealPage to basically jack up their rents because then it’s going to be higher and higher and higher and you can’t find something that you can afford.”

Last spring, the Berkeley City Council tried to ban rent-setting algorithms, but then voted to push back the ban because RealPage filed a federal lawsuit against the city, arguing the ban violates its First Amendment rights.

This week, California Attorney General Rob Bonta announced a $7 million settlement with Greystar.

“Even more important than that $7 million settlement is the commitment that Greystar is no longer going to be engaging in these market rigging processes,” said antitrust lawyer Lee Hepner.

As part of the settlement, Greystar has agreed to stop using the software.

“So the effects of rent-rigging algorithms is to allow competing landlords to act as one,” Hepner explained. “They mix their data behind the scenes, they align their pricing strategies, and they take the recommendations of an entity like RealPage to inflate rents and eliminate competition from the market. It’s really that competition that we rely on to drive rents down and to incentivize new investment in housing and to bring vacancies online too.”

Hepner says it’s resulted in tenants paying inflated rents for years. As Lewis continues to hear from tenants, he’s worried the fine isn’t big enough.

“They’ve been illegally and criminally harming tenants,” said Lewis. “So this really isn’t a sufficient settlement for all the harm that they have done to tenants across the country through their criminal and harmful actions.”

Greystar owns about 950,000 rental units nationwide. Lewis wants to see leaders do more to prevent this from happening again.

“There needs to be much larger consequences, which is why it’s so important for states and cities and also federal government to pass laws explicitly banning this practice and making sure there are significant penalties for these violations,” Lewis stated.

Greystar responded to the settlement, saying, “We are pleased this matter is resolved and remain focused on serving our residents and clients.”