The U.S. Department of Justice (DOJ) has filed a lawsuit against several major landlords, accusing them of using an algorithm to coordinate rental prices and sharing confidential information with competitors to maximise profits. The legal action comes as renters across the U.S. face mounting financial pressures amid an unforgiving housing market.

The lawsuit arrives at a time when housing costs are squeezing American renters. In 2022, half of renters spent more than 30% of their income on rent and utilities, according to recent data. Rising rents, coupled with stagnant wages, have left many struggling to afford necessities like medication, groceries, and school supplies. Evictions have surged, with Princeton University’s Eviction Lab reporting that 1.5 million people are evicted annually.

While factors such as a decline in new home construction have contributed to the housing crisis, the DOJ’s lawsuit spotlights the role of large landlords in driving up rental prices.

The DOJ, supported by 10 states—including North Carolina, Tennessee, Colorado, and California—has accused six landlords managing over 1.3 million rental units across 43 states and Washington, D.C., of conspiring to prevent rent reductions.

The lawsuit alleges these landlords exchanged sensitive information about rents, occupancy rates, and pricing strategies with competitors. Shared data reportedly included renewal rates, algorithmic pricing recommendations, and the use of incentives like offering one month’s free rent.

One defendant, Greystar Real Estate Partners LLC, denied the allegations in a statement on its website:

“Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices. We will vigorously defend ourselves in this lawsuit.”

The landlords are now part of an ongoing lawsuit against RealPage, a company that provides an algorithm advising landlords on setting rental prices. Prosecutors claim the algorithm uses sensitive competitive data, allowing landlords to coordinate pricing and avoid competition that would typically lower rents.

The DOJ revealed that one of the accused landlords has agreed to cooperate with the investigation. A proposed settlement would impose restrictions on the company’s use of competitors’ data and algorithms to set rental prices.

“Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country,” said Doha Mekki, acting assistant attorney general for the DOJ’s antitrust division, in a press release on Tuesday.

The lawsuit could have significant implications for the rental housing market, potentially curbing practices that prosecutors argue have worsened the affordability crisis. If successful, the DOJ’s action may bring relief to millions of renters struggling to keep up with soaring housing costs.