Arizona’s Attorney General Kris Mayes is suing several landlords and software company RealPage for “illegally colluding” to raise rents and harming thousands of renters in the state.

“They tricked tenants into paying more for rent than they otherwise would have,” Mayes said in a recent press conference.

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The lawsuit alleges the landlords colluded with RealPage, which provided sensitive data on pricing and occupancy from competitors in the market and used its revenue management software to illegally set prices.

“This was not a fair market at work,” she says. “This was a fixed market that harmed renters while driving up the profit margins for this housing cartel.”

A rental ‘conspiracy’

Mayes’ office estimates landlords using RealPage software charged 12% more compared with landlords who didn’t use it — adding this is a conservative figure. It also reports about 70% of multifamily apartment units in Phoenix and half of units in Tucson are owned, operated or managed by companies that have contracted with RealPage.

Mayes says in a press release that RealPage artificially inflated prices and caused Phoenix and Tucson residents to pay millions of dollars more in rent.

“The conspiracy… has harmed Arizonans and directly contributed to Arizona’s affordable housing crisis,” Mayes says, noting in the last two years, residential rents in Phoenix and Tucson have risen by at least 30% largely due to “stifled fair competition” and “a rental monopoly” in the state’s two largest metros.

Apartment Management Consultants, one of the landlords named in the suit, denied the allegations and told 12News it manages approximately 85 apartment properties making up over 18,000 apartment homes in Arizona — of which, only one property (comprised of 160 dwelling units) uses RealPage software.

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Phoenix and Tucson renters struggling with massive rent increases

Mayes’ office says the defendants sought to profit at the expense of Arizona renters, who struggled to keep up with massive rent increases when inflation soared to record highs.

In fact, rent prices in the Phoenix metro area have skyrocketed by 80% between 2016 and 2021, while the median household income only increased by 22% in the same period, reports Arizona PBS. The Tucson metro area has also seen rent surge 30% in the past two years.

The lawsuit further notes Phoenix has “led the nation in rent increases” with many residents using 50% to 100% percent of their income to pay for rent. The Eviction Lab reports there have been 84,230 eviction filings in the past year.

“You cannot throw a rock in Phoenix without hitting a building that was jacking up rents on their customers,” Mayes says.

If the lawsuit succeeds, the state is calling for restitution to renters, a court order to landlords to stop their anticompetitive practices and civil penalties paid out to the state.

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