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The Internet of Things – Legal Issues arising from Smart Buildings

05 May 2016 #Commercial Real Estate

The Internet of Things (‘IoT’) is not a particularly novel concept: the idea that everyday items be connected to the internet and be enabled to send and receive data is something which has been in development for a while.  More and more ‘uses’ for this type of technology are being developed.  Internet-enabled devices are able to operate at very low levels of power usage and produce tiny packets of data.  Data which is captured in this way over a long period, when properly analysed, can assist in numerous ways.  These can include monitoring utilisation rates, behaviour and footfall patterns and analysing the efficiency of utility management.

Buildings can be made ‘smart’ in a variety of ways.  Data is captured from sensors or cameras installed in the building or equipment.  The analytics being applied to the data is becoming ever more sophisticated.  Systems are able to predict future usage based upon past patterns of use.  There can be numerous different ways in which the information is able to be used to beneficial effect.  These can include making efficiency savings as well as subtly influencing behaviour, for instance, of customers in shopping centres.

Energy consumption and efficiency continue to be an increasingly important consideration – in view of the possibility of energy shortages and ever more rigorous energy efficiency requirements on the horizon.  Using IoT-enabled plant and equipment, with rigorous data analytics, it will increasingly be possible to reduce energy consumption in a smart way, tailoring system performance around expected patterns of energy usage whilst not compromising on building comfort.

The different types of data collected from IoT-enabled devices can all seem quite innocuous.  However, issues of data security do arise.  Anything which is connected to the internet is at risk of cyber attack.  Protection against such attacks and insurance of losses consequent on them will need to be considered as matters to be set out in leases – especially where the IoT building systems are managed by or on behalf of the landlord in a multi-let building.

Additionally, landlords themselves could use the data collected from IoT systems installed in tenanted areas to their advantage.  Shopping centres in some parts of the world have sensory technologies installed that mean that retailers can compete through mobile phone apps; time-limited discounts have been used to propel shoppers to other stores.  Data sharing of this kind needs to be properly regulated in leases so as to ensure that the tenant is not disadvantaged.

The Internet of Things is here to stay.  Occupational requirements continue to change at an unprecedented rate.  The relationship between landlords and tenants needs to evolve and leases will continue to change in their scope and expectations to reflect this.

Clarkslegal, specialist Real Estate lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Real Estate matter please contact Clarkslegal's real estate team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Simon Ralphs

Simon Ralphs

T: 020 7539 8049
M: 0779 900 7323


Commercial Real Estate team
+44 (0)118 958 5321