Aversion to smart home gear in rentals could stall sector enthusiasm

The past few months have seen a trickle of lawsuits and a smattering of news coverage concerning pre-installed or now-mandated smart home equipment in rental properties, which have faced significant consumer backlash. It seems that landlords and property management companies might have been overenthusiastic in installing the latest gadgetry, and could fall foul from this hostility.

Newly built homes for sale seem the best place for smart home pre-installations. They allow a buyer to spec the build out how they like, paying extra for the devices and services they want, as they would choose the paint colors and flooring options. It enables a buyer to move in to a premium-feel home, especially if the smart home installers do their job right.

In comparison, the rental version is the inverse. Once built, it seems very unlikely that a landlord is going to offer such a choice to each new tenant, meaning that those who sign a new lease are going to be stuck with what is already installed. This is probably fine for functions like lighting and HVAC, but security, video features, and access control are going to become major pain points – for both the new tenant and the property’s owner.

These devices will need lifetime support, including software updates and the associated fees. That’s a cost that could add up quickly, and would need to be factored into the rental calculations. Similarly, if one is hoping for a premium feel, then sufficient testing needs to done to ensure that the installed ecosystem plays nicely together. In addition, batteries will need to be changed in some devices, and if enough battery-powered devices are installed in a property, the task and cost of changing these out through a lease could also generate quite a bit of friction.

Those problems could also prove a headache for the agents trying to show off a new home to a prospective tenant. Any minor slip-up in a demo could prove enough to spike the deal, and given that these are costly features that are therefore most likely to appear in more expensive leases, the risk is higher. There’s more competition at the higher end of the market here, and a poorly installed smart home is one that will struggle to be let, and possible cause premature contract breaks.

There are other liability issues to consider. What if the connected lock that an owner installed malfunctions or is hijacked, allowing someone to enter the residence of the tenant? Is that the owner’s fault, or the equipment supplier? Who gets sued for what was taken in the theft?

In addition, would the lock be tantamount to a breach of the privacy expectation that is usually outlined in rental contracts? If the owner can see when people are coming and going, is that an over-reach in the eyes of a judge?

Consequently, sticking with the dumb home approach seems safer for the entity looking to easily sign new leases. However, there is proven consumer demand for smart home devices and services, and if the rental contracts continue to prohibit the installation of such devices, then it seems the market might reach an impasse.

The owners could take a more behind-the-scenes approach to smart home features. From the inhabitant’s perspective, they might be living in a dumb home, but behind the walls, leak sensors could be monitoring water pipes to ensure that small leaks can be fixed before they become major costly problems. Connected fire and smoke alarms are another key use case, as are air quality sensors that might help alert owners to damp or fungal problems. Energy monitoring and efficiency services are another good area for exploration, with utilities becoming increasingly interested in developing demand-side capacity for demand-response and energy storage.

A longer-term perspective does open up the potential of some of the more complex smart home ecosystem features. There’s evidence that young professionals move between jobs and cities with far greater frequency than their predecessors, and so there may well be a market for the sort of longer-term accommodation where a person can show up with nothing more than a car’s worth of belongings but feel right at home – in an environment that has adjusted itself to suit their particular preferences. We’ve outlined this before in a discussion of Life-aaS, and it there are more companies looking at more communal living opportunities that are akin to WeWork’s approach to office space rentals. In those environments, these smart home tools seem inextricable from the experience, but we are a long way off from that.