Smart Thermostats: Initial Landlord Experiences

Steffen Karg is a member of the Board of Directors of the housing association Wohnungsgenossenschaft Letter eG. As a landlord his remit is to “let out apartments at socially acceptable prices” but, just like the tenants, he is facing pressure from rising energy and operating costs, climate protection policy provisions and the need for renovation work.

Letter eG, based in the Lower Saxony town of Seelze, currently has a portfolio of 265 apartments. As Letter eG largely refrains from increasing rents during an ongoing tenancy, they remain low. As a result, many tenants have been living in the apartments for several decades. Letter’s average price per square metre for new lettings is 6.50 euros, as against 5.30 euros for existing tenancies. This leaves hardly any money for extensive renovation work. “We face an increasing dilemma here,” Karg explains.

One in six households in Germany is now overburdened with housing costs. 16% of German rental households pay more than 40% of their net household income on rent, while for 1.5 million households the figure is over 50%. This means that in 2022 a total of 3.2 million households paid rent that was well above average (source: DeStatis (2023)). In order to alleviate the problem for tenants and landlords alike, Seelze has now switched to smart heating technology.

Participation in the Germany-wide flagship project

As part of a noventic group flagship project, apartment buildings run by 14 German housing companies were equipped with smart thermostats from tado° for the 2022/23 heating season. It can be stated from the outset that the management of the various housing associations takes the view that the complete solution offered by the noventic group can easily be integrated into existing housing industry processes.

The integration of smart thermostats is new in the context of rental apartments, but tado° solutions have been in successful use in single-family homes for ten years. To date over three million smart thermostats have been installed in more than 400,000 households .This has enabled single-family households to achieve average energy savings of 22%, a figure now also being targeted by the apartment building sector through the use of a new generation of smart thermostats. To get closer to this goal, the new thermostats will be specially tailored to the requirements of the residential housing industry.

Find out more about Energy savings in apartment buildings.

Also beneficial for tenants

In Karg’s opinion the project’s success depends on involving tenants in the process and providing them with assistance. Thanks to the company’s modest size and its proximity to, and close contact with, its tenants, this was a great success, with tenants’ questions quickly being answered. The need for advice varies greatly: “We have a very mixed tenant base that includes both young tenants who are comfortable with IT and also older people who have little or no experience with smart devices. That’s why the on-site rollout was an important step.” Tenants in Seelze’s Letter district received training in how to use the smart thermostats when they were installed. “I get the impression tenants are going along with it, ” is board member Karg’s initial assessment. “Of course tenants use the smart thermostats to varying degrees, depending on their needs and knowledge. This works well for all users, there were no queries once they were up and running,” concludes Karg.

Individual solutions for each tenant

The heating solution must also be diverse as tenants’ lifestyles are. “We cannot and do not want to impose anything on our tenants. People returning home after working a night shift want their apartment to be warm when they arrive. Therefore it doesn’t make sense to turn everyone’s heating down centrally in the evening.” Because of this, another key consideration for Karg was for the smart thermostats to operate in a way which allows heating solutions tailored to tenants’ individual lifestyles. Students, shift workers, retirees, and indeed tenants working from home, all have different needs. “Therefore it makes sense for them to be able to control room temperatures individually.” They can do so directly at the thermostat or conveniently via app, without having to forego their usual comfort.

Increase in property values

The question of who will meet the future costs of Letter’s smart thermostats has yet to be decided. The burden imposed on tenants should be kept as low as possible, which is why the housing association generally tends to meet equipment, installation and operating costs itself. For landlords, installing smart thermostats not only reduces energy consumption and heating costs, but also has the advantage of increasing the value of their property. This is because the energy savings can have a positive effect on a building’s energy efficiency class and the CO₂ cost allocation code (CO₂-Verteilungsschlüssel).

Study confirms the efficiency of smart thermostats

To accompany the flagship project, during the period from November 2022 to February 2023 Karlsruhe Institute of Technology (KIT) conducted a scientific study on energy saving potential in apartment buildings. This was in response to current energy and climate protection challenges, which call for measures to reduce greenhouse gas emissions that can be implemented quickly. Renovation work is an important means of cutting energy use. However, for various reasons renovation work does not always bring about the desired energy saving effect. Alongside thermal insulation and renovation work, alternative, faster-acting measures were also researched. During the course of the current study, the energy-saving effects of smart radiator thermostats were therefore evaluated.

From both tenants’and landlords’ perspectives, smart thermostats offer a quick and uncomplicated way to produce savings. Moreover, the study findings showed that, as well as energy savings, time and cost benefits can also be achieved. During the three-month study period, households using smart radiator thermostats managed to achieve energy savings of 15.5% compared to households without the equipment. Households with smart thermostats were also found to average 31.5% lower relative heat consumption. Even partially equipped buildings recorded an average of 21% lower relative heat consumption than households without any such equipment. The study highlights the efficiency of smart thermostats, which are a key element in efforts to save energy and heating costs in the building sector.