Rental software YieldStar under scrutiny for allegedly inflating rents artificially
A proposed class-action lawsuit in Canada accuses 15 landlords and property managers of colluding to inflate rental prices through a controversial software system.
The claim alleges that RealPage Inc.'s YieldStar program facilitated rent price-fixing by enabling landlords to share proprietary pricing data, potentially leading to overcharges for tenants across the country.
The lawsuit, led by attorney Adam Tanel, alleges that the YieldStar software created a "non-competitive landlord atmosphere" by allowing property managers to exchange pricing data, which would typically remain confidential.
"If these allegations are proven in court, it is absolutely horrendous behaviour," Tanel told CBC's The National.
RealPage, the Texas-based company behind YieldStar, has denied the allegations, asserting its software is "legally compliant" and affects less than 1% of the Canadian rental market. RealPage also faces a similar antitrust lawsuit filed by the US Department of Justice in August.
The Canadian lawsuit seeks financial compensation for tenants who rented from the 15 companies named, dating back to 2009. Tenants allege they overpaid due to inflated rents driven by YieldStar. Among the named companies are major property managers like Quadreal Property Group, CAPREIT, and Tricon Residential.
The 15 companies named in the lawsuit are:
- RealPage Inc.
- Quadreal Property Group
- Westcorp Property Management Inc.
- FirstService Residential Management Canada Inc.
- GWL Realty Advisors Residential Inc.
- M&R Property Management
- Rhapsody Property Management Services Limited Partnership
- Hollyburn Properties Limited
- Canadian Apartment Properties Real Estate Investment Trust (CAPREIT)
- Dream Unlimited Corp.
- Woodbourne Capital Management International LP
- RIOCAN Real Estate Investment Trust
- Choice Properties Real Estate Investment Trust
- Tricon Residential Canada ULC
- Associated Property Management (2001) Ltd.
Cynthia Black, the lead plaintiff in the case, lives in a Toronto building owned by GWL Realty Advisors (GWLRA). Black became concerned about YieldStar’s use after learning about the US lawsuit and its allegations of collusion and price manipulation.
"I want justice for renters. I want this software and other software like it to be banned in Canada, and I want retribution for what has already been lost," Black said.
GWLRA confirmed it previously used YieldStar but ceased doing so after an internal review. Tricon Residential also stopped using the software this past summer, stating it had no impact on rents. Other companies, including CAPREIT, denied using YieldStar and expressed intentions to seek dismissal of the case.
Tanel, however, said that property owners remain liable if their property managers used YieldStar, saying,
"A property owner who hires a property manager that uses YieldStar [means] the property owner is also liable because they are one of the beneficiaries of the use of the product that we say is illegal."
Tenants like Black and Cameron Clark, who also resides in a GWLRA-managed property, are urging Canada’s Competition Bureau to launch a formal investigation into YieldStar’s use.
The Bureau has yet to confirm whether an investigation is underway.
Read more: Canada investigates 'Rent Cartel' allegations
Clark expressed frustration over rising rents, saying, “It feels like it has become impossible to live in Toronto and across Canada, and the rising rents don’t make sense and they aren’t fair.”
"This is a lawsuit about damages suffered by real people and money that folks were deprived of if they paid above-market rent as a result of a non-competitive landlord atmosphere," Tanel added.
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