N.C. Attorney General joins RealPage lawsuit, tackling rent inflation across the state

On Jan. 7, North Carolina Attorney General Jeff Jackson joined the U.S. Department of Justice and nine other states in filing an amended lawsuit against six corporate landlords and software company RealPage for illegally raising rent prices.

The lawsuit alleges that the landlords violated the Sherman Anti-trust Act and the North Carolina Unfair or Deceptive Trade Practices Act, which both prohibit businesses from engaging in unfair practices affecting competition in the market to increase a company’s market influence. 

According to the lawsuit, RealPage is a property management software that utilizes nonpublic data from landlords to recommend rent cost adjustments to landlords using the program. 

When landlords use RealPage’s software, they must agree to provide private information about their properties’ rent transactions, such as rent discounts, rent terms and lease status. RealPage then analyzes data from more than 16 million rental units across the country to provide suggested rent changes to landlords. 

The lawsuit states that traditionally, healthy market competition would lead to landlords offering discounts on rent or luxury amenities in order to compete with other landlords. With RealPage’s analytical services, landlords are now coordinating their rent prices, allowing them to raise prices with less fear of losing prospective renters to other properties with lower prices, according to the lawsuit.

“In the absence of that software, the property owner will have to find public information and analyze the market and ideally price the rental at a lower level than the one that will come up if they use the software,” Roberto Quercia, a professor in UNC’s Department of City and Regional Planning, said. 

An interactive map created by The Washington Post shows that 17 properties in the Chapel Hill area are managed or owned by landlords cited in the lawsuit, including Union Chapel Hill, Bell Chapel Hill and Collins Crossing Apartments. 

The average rent prices in Chapel Hill and Carrboro have increased by around $500 and $250 respectively over the last five years, contributing to an affordability crisis in the area. 

“When people take advantage of the essential need for housing to extract the maximum profit possible by cheating the system, they are damaging their fellow citizens and they are damaging the company,” Chapel Hill Town Council Member Theodore Nollert said. 

Many community members who work in Chapel Hill and Carrboro must reside outside of the towns due to high living costs, Carrboro Town Council Member Jason Merrill said.

“A lot of people that work in the service industry or work hourly wage jobs live twenty, thirty, forty miles away, over two counties away, because that’s the closest they can afford a place to live,” Merrill said. 

As UNC’s waitlist for on-campus housing continues to grow, there is increasing demand from students for off-campus housing. Students are disproportionately impacted by increased rental prices, Nollert said. 

North Carolina law prohibits local governments from enacting rent control policies, which would directly counteract rental price manipulation by placing limits on rent costs and increases. Although price manipulation stimulated by RealPage does not directly inhibit Chapel Hill's or Carrboro's specific affordable housing initiatives, increased rent costs make it more difficult to reach the overall goal of providing housing to all residents, Nollert said. 

The State of North Carolina is seeking penalties of up to $5,000 per violation of the antitrust laws and hopes to restore a competitive rental market, according to the lawsuit. 

“I would like to see this be the first in a domino effect that ultimately improves policies and practices to prevent this type of behavior in a community,” Merrill said. 

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