Cynthia Black believes her rent has been rigged.
Since 2022, the Toronto resident says she has twice faced annual rent increases of either seven or 11 per cent — depending on the lease type her household was offered — in two Livmore buildings owned by GWL Realty Advisors, a division of Canada Life.
“The hikes have never made any sense. And when myself and other tenants sat down and asked [GWLRA] to please stop raising rents so high, they told us they use software called YieldStar to help determine our rents,” she told CBC’s The National.
But in June, she says YieldStar came up again — only this time it was in the news, as the FBI was investigating the company that owns it, RealPage, and landlords who use it for alleged collusion, price-fixing and artificially inflating rents across the U.S.
YieldStar is basically an outsourced price fixing scheme. The app assembles data on average rents in an area from across all the different landlords who use the app, and then recommends the “optimum” price for rentals in the area. “Optimum” of course means “The highest rent this market will bear.”
The users will, of course, claim that this isn’t collusion because they’re not directly communicating with each other, and it’s not price fixing because “they’re just following the recommendations of the app.” The whole thing is just criminal conspiracy outsourced to a third party, and the reality is that it’s pretty much impossible to stop stuff like this from happening somehow. This is exactly why aggressive rent controls are essential to protecting renters.
Erm, how’s this different than a vendor looking over at the other vendor’s prices and setting their own to match? That wouldn’t be price fixing. To be clear I am not advocating for the market, rather highlighting this flaw isn’t captured by the standard price fixing idea yet it has the same effect. And there isn’t a market solution to it, rather as you suggest, intervention is needed.
That’s precisely my point. This is price fixing, very obviously so, but it’s almost impossible to actually prevent because at some point as long as people in an industry can share information and have an incentive not to undercut each other, behaviour that is indistinguishable from price fixing - even if it could not legally be defined as such - will inevitably emerge. When I say this is price fixing, that’s not a legal judgement, just an observation of what the behaviour clearly is, regardless of how it would be legally defined. If it looks like a duck, etc. I’m going to call it price fixing because that is the ultimate effect that it has.
Hence my point that ultimately the only solution to this is aggressive rent controls.