Large institutional landlords are reportedly using cutting-edge software that effectively allows them to collude in order to drive up rents, including through artificial scarcity. That’s the upshot of the latest report from the nonprofit journalism outfit ProPublica.
The software, ProPublica suggests, has created “a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing.”
Here’s one scary detail: “In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage.”
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So if a handful of large property managers have the ability to fix rents and hike them very high, then we ought to blame overregulation.
Seattle reportedly lost 3,400 rental units in 2021, and the city’s burdensome and growing regulations are surely a cause.
One Seattle publication explained the lay of the land: “Seattle’s rental laws are the reason landlords are leaving. There is a law that that prevents landlords from running criminal background checks. Also, landlords can be required to provide financial relocation services to tenants who qualify. That eats up profits.”
“The council passed a new law last week to prevent evictions caused by the COVID-19 pandemic. The repayment for past due rent is capped at one-third of the tenant’s current rent. The renter is by law given a ‘reasonable’ amount of time to pay landlords back.”
“In the last year, Seattle City Council has passed at least five new rental laws. Small landlords want to be exempt from some of the laws. This may be the way to bring small landlords that left back to the city.”
So Seattle is regulating in the name of protecting renters, but it’s actually protecting large landlords from competition. When landlords aren’t forced to compete for renters, renters have no leverage.
Eviction moratoria, rent control, and overregulation all make it impossible to be a small landlord. To some sorts of minds, that’s good. Small landlords are derided as inefficient, incompetent, or corrupt.
now do “small landlords” https://t.co/ncDrceellU
— Leslie R??t (@les_ja) August 10, 2020
Yet small landlords tend to charge lower rents and rent out single-family homes, which are both great for young families — something we need more of these days.
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Undoubtedly, Congress and state legislators will try to crack down on this tech-enabled quasi-collusion among big landlords, but the best regulation of landlords is competition. To get more of that, we need less needless regulation.
