Smart Home

Smart Home refers to the networking of a property’s building services, appliances, and security systems via digital communication protocols that enable automated or remote control. Typical applications include heating, lighting, blinds, access control, security technology, and energy management. For property owners, smart homes are becoming increasingly important as a factor in increasing property value and a means of saving energy.

Typical Smart Home Systems and Technologies

The market distinguishes between open and proprietary systems as well as various communication protocols:

• KNX: The international building bus standard is considered the most robust and future-proof solution for new construction and comprehensive renovations. A KNX installation requires certified specialist contractors and is more costly, but offers the highest reliability and manufacturer independence.
• Z-Wave / Zigbee / Matter: Wireless protocols suitable for retrofitting in existing buildings, as no complex cabling is required. Matter has established itself as a cross-platform standard that brings together many manufacturers (Apple HomeKit, Google Home, Amazon Alexa).
• Proprietary systems: Manufacturers such as Loxone, Homematic IP, or Gira offer closed ecosystems with user-friendly setup, which, however, can lead to manufacturer dependency in the long term.

For new construction, we recommend planning the infrastructure (conduit, network cabling, central data cabinets) from the outset, even if the smart home technology is installed later.

Smart Homes as a Value-Added Factor in Real Estate

Well-executed smart home installations have a positive impact on property value if they meet the following criteria:

• Energy Efficiency: Intelligent heating control (e.g., room-specific regulation, occupancy detection) can reduce energy consumption by 15-25% and improves the building’s energy efficiency rating, which has directly influenced market value since the tightening of the EnEV/GEG regulations.
• Security: Surveillance cameras, smart door locks, and smoke and water detectors with remote alarms enhance perceived living comfort, especially for families and older adults (Ambient Assisted Living).
• Comfort and Quality of Life: Scene control, automated shading, and voice control are in high demand among younger buyers and can accelerate the sales process.

Important: Installation must be performed professionally and documented. Self-installed systems without proper wiring are more likely to deter than convince potential buyers.

Subsidies for Smart Home Measures

Smart home technologies are eligible for subsidies when used as part of energy-efficient renovation measures:

• KfW Programs: Energy-efficient home renovations that integrate smart home technology for energy savings are subsidized through KfW loans (261) and grants (BEG). The integration of smart heating control can improve the achievable efficiency class.
• BAFA: The installation of smart heating control as part of a subsidized heat pump or hybrid heating system is eligible for funding through the BAFA Federal Funding for Efficient Buildings (BEG EM).
• Tax Deductibility: Labor costs for smart home installation (labor portion) may be deducted from taxable income at a rate of up to 20% (max. €1,200 per year) under Section 35a of the German Income Tax Act (EStG).

Data Protection and Cybersecurity in Smart Homes

The networking of technical systems also creates risks that homeowners should be aware of: Smart home systems are potentially vulnerable to hacker attacks if they are not properly secured. Default passwords, unsecured Wi-Fi connections, or outdated firmware are typical entry points. We recommend operating smart home devices on a separate Wi-Fi network (guest network), scheduling regular firmware updates, and relying on well-known and reputable brands.

For rental properties equipped with smart home technology, data protection for tenants must also be considered: Cameras and motion detectors in common areas are subject to strict data protection requirements. In units under individual ownership, tenants are generally permitted to install smart home technology themselves; landlords should clearly stipulate this in the lease agreement.

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg metropolitan region, we have observed when marketing high-quality new-construction condominiums and single-family homes that documented and intuitive smart-home features noticeably improve buyer demand and price perception. Smart heating control and burglary protection are particularly in demand. For existing properties in Fürth, Erlangen, or the Knoblauchsland region, targeted retrofitting with wireless systems is often more worthwhile than a costly KNX conversion. We can help you assess which smart home investments make sense before a sale and which do not justify the cost.

Smart Homes in Rental Properties: What Landlords Need to Know

Landlords who install or retrofit smart home technology in rental apartments should be aware of certain legal considerations. Fixtures that are permanently attached to the building (e.g., KNX switches, permanently installed door intercoms) are considered part of the rental property and are transferred to the tenant upon signing the lease. Smart thermostats that are screwed into radiator valves can remain the landlord’s property-but should be listed in the handover report.

Notification of modernization is required when installing smart home systems if this is intended to increase the local comparative rent (modernization rent increase under Section 559 of the German Civil Code [BGB]). Pure maintenance measures (replacing a defective door system with a smart system of the same function) are possible without prior notice. In practice, we recommend involving a specialist attorney for tenancy law at an early stage for larger smart home projects in rental properties.

Frequently Asked Questions

Is a smart home worth it for an older existing property before sale?

That depends on the price range and the target audience. For upscale single-family homes priced above €600,000 in the Nuremberg metropolitan area, a retrofittable wireless smart home solution (cost: approx. €2,000-5,000) can increase the selling price disproportionately. For simpler rental properties, the return on investment is significantly lower.

Which smart home system is right for a new construction?

For new construction projects involving full renovation, we recommend KNX as a future-proof, manufacturer-neutral standard. For retrofitting without extensive wiring, Zigbee- or Matter-compatible systems (e.g., Homematic IP, Philips Hue) offer a good balance of cost and functionality.

Does smart home technology count as a value-enhancing modernization under tenancy law?

Yes, provided the measure permanently increases the property’s living value or leads to sustainable energy savings, it can be classified as a modernization under Section 555b of the German Civil Code (BGB). The landlord may then pass on 8% of the incurred costs annually to the rent, provided that the statutory notice and cap limits are observed.

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