The Smart Home Movement: Following Consumer Demand – smart technology can save energy on heating, cooling and lighting and can even save water through smart irrigation, it is viewed as a valuable environmentally-friendly feature of a home.

The Smart Home Movement: Following Consumer Demand
Smart homes are moving past the early-adopter stage and through the acceptance and demand stages quickly.
Published by: Special to CONTRACTOR | Aug 20, 2018

The market for smart home technology that was about $24 billion in 2016 is anticipated to reach $53 billion by 2022. Smart homes are moving past the early-adopter stage and through the acceptance and demand stages quickly. With this in mind, forward-thinking builders and contractors might consider offering a wide-range of these features in new residential construction projects.

What is Creating the Demand for Smart Home Technology?

Acceptance of Technology

Initially, there may have been some reluctance to accept smart technology in homes. This reluctance may have been rooted in concerns about reliability, perceived need, security, and ease of use. In a few short years, however, most of these issues have been addressed and more benefits to the technology have been realized. Artificial Intelligence (AI) assistants like Siri and Alexa have exploded in popularity and have been accepted into millions of homes. Many consumers have come to not only accept the help of these devices but have come to rely upon them.

Millennials Entering the Housing Market

Slow to embrace homeownership, mainly due to a challenging economy and other unique circumstances, the largest segment of the population on the planet is moving into real estate in increasing numbers. While U.S. Census Bureau statistics show that home ownership by Millennials is still relatively small at 36%, according to Bloomberg, its growth from 34.7% a year earlier was higher than any other age group between 2016-2017. This is a generation who grew up with technology and the convenience and connectivity it provides. While their predecessors may have sought out open floor plans, garden tubs, and granite countertops, smart technology is potentially more important to this younger generation of home buyers.

Demand for “Green” Features

Because smart technology can save energy on heating, cooling and lighting and can even save water through smart irrigation, it is viewed as a valuable environmentally-friendly feature of a home. Millennials aren’t the only generation that values green brands and products, but their increasing involvement in real estate is certainly having an impact in this regard.

Adding Value to Homes

Like other features that create value in a home, smart technology can increase interest and demand for a property, and when properly designed and installed, can add real value. This is particularly true when local buyers are familiar with the technology and understand its convenience and capabilities.


According to an article in Reuters, the globally connected home security system market is expected to grow by over 27% in the period from 2017-2021. Security is an integral part of smart home features, including the ability to lock and unlock doors remotely, detect motion, check into a home via live video and more. This expected demand coincides with the anticipated growth in smart technology.


Consumers have come to rely on smartphones to provide directions, information about where to eat, and to stay connected with family and friends. Many count on smart technology for references and referrals, to make purchases and to share rides. It has become very much an “on-demand” society and it is no surprise many would want these conveniences woven into their homes at some point.

Popular Smart Home Features

It is easy to understand the value and convenience in having the most popular smart home features installed in a home. These include:

• Lighting

• Heating and Cooling

• Appliances

• Entertainment

• Locks and Security

• Sensors and Detectors

• Window Blinds

• Home Healthcare

• Irrigation

Since much of this technology can be more expensive to install as aftermarket features, more contractors are realizing the value of including them in new home construction. This often provides for an economy of scale in costs, while offering home buyers an all-in-one, seamless, smart home network solution. A home with professionally installed, complete smart home features will likely have a higher perceived value than one with a series of DIY installed, individual features.

The Difference Between Automation and Smart Features

There is a difference between features like automatically-timed thermostats and smart features in a home. Smart features are generally Wi-Fi connected devices that “learn” the habits of its owners. Automation in a home falls into the programmable device category.

Well planned smart features can work in concert with each other and be simply managed from a single device, most commonly a smartphone. Smart features have become increasingly secure and desired. For a home to be considered “smart”, it should generally have three or more smart features.

Smart Homes: Here to Stay

It is difficult to imagine life today without social media, smartphones or GPS systems, and it will only become more difficult as time passes. It may not be long before many have these same expectations in their homes. Today, 43 percent of those who own smart homes are between the ages of 18 and 34. Builders and contractors who want to stay relevant in the coming years may want to prepare now to offer homes and devices that are better connected to their owners in the future.

What other construction feature increases convenience, adds value, improves safety and security, saves energy, and is “green”? What other home system appeals more to today’s home buyers? Smart technology in homes is neither fad nor limited to just Millennials. It appeals to all buyer segments and it is here to stay. The direction smart homes take from here is certainly up to debate, but it is hard to imagine things will stay as they are for long.

All change: non-residents and UK property

Changes to the way non-residents holding UK land and property are taxed were included in the draft legislation for Finance Bill 2018-19. What are these changes and how will they affect your clients?

A number of changes to the way non-residents that hold UK land and property are taxed are included in the draft legislation for Finance Bill 2018-19, published on 6 July 2018. Some of these are intended to come into force as early as April 2019, meaning that clients and their advisers have less than eight months to get to grips with them.

This article provides a brief overview of these changes and highlights some key points to consider. Readers who think a provision may be relevant to their clients should consult the relevant draft legislation and explanatory notes for the Finance Bill.

Extension of scope of Non-Resident Capital Gains tax

Since April 2015, all non-UK resident individuals, closely held companies, trustees, personal representatives and funds have been subject to non-resident capital gains tax (NRCGT) when disposing of UK residential property (see s14B to 14H and Schedule 4ZZB TCGA 1992).

With effect from April 2019, the scope of NRCGT will be expanded to also cover disposals of:
Related Content

Tax New property allowance: Useful but not that simple?
Administration New trading allowance: simplicity, but not as we know it
Tax Electric cars and employees – light in the darkness?

Non-residential (i.e. commercial) UK property; and
“Substantial” interests in “UK property rich entities” – referred to as “indirect disposals” (see below).

Non-resident diversely held companies, widely held funds and life assurance companies will also be brought into the scope of NRCGT for the first time from April 2019. All non-UK resident companies, including close companies, will be charged to corporation tax rather than capital gains tax on their gains.

Where an asset is brought into NRCGT for the first time as a result of these changes, it can be rebased to its April 2019 market value, ensuring no gain arising prior to that date is subject to UK tax. Assets already in the scope of NRCGT (e.g. UK residential property) will continue to be rebased to April 2015.

A side effect of these changes, and one which may please many tax advisers, is that Annual Tax on Enveloped Dwellings (ATED)-related CGT will be abolished from April 2019.

Indirect disposals and NRCGT

The provisions for indirect disposals are complex and are intended to catch, for example, the situation where a non-resident sells shares in a company which holds UK land as an investment.

For an indirect disposal to be subject to NRCGT, the following conditions have to be met:

The disposal has to be of a right or interest in a “property rich” company – broadly one which, at the time of disposal, derives at least 75% of the total gross market value of its assets from interests in UK land; and
The non-resident investor must have a “substantial indirect interest” in the UK land – broadly at any time in the two years prior to disposal they (together with certain connected parties) had at least a 25% investment either directly, or indirectly, in the “property rich” company.

There is a helpful exemption – if all of the UK property (or all but an insignificant value) has been used for trading purposes throughout the year leading up to the disposal, and it is reasonable to conclude it will continue to be so used after the disposal, then the NRCGT rules won’t apply. This should mean for example that most investments by non-resident investors in UK retail and hospitality businesses are exempt.

Payments on account for residential property gains

Another proposed change will affect both UK residents and non-residents who own residential property.

From April 2020, UK residents will be required to make CGT payments on account and file returns within 30 days of disposing of a residential property in a similar way as for NRCGT. The change will not apply where the gain is not subject to CGT (e.g. because it is covered by private residence relief).

For non-UK residents, the existing NRCGT 30-day filing and payment on account requirement will be extended:

To apply to all companies from 6 April 2019; and
To remove the exception for making a payment on account where a self-assessment return is filed for disposals on or after 6 April 2020.

Non-UK resident companies carrying on a UK property business

From April 2020, non-UK resident companies carrying on a UK property business will become subject to corporation tax rather than income tax.

This raises several practical issues:

The corporation tax rules, including the corporate interest restriction and other anti-avoidance provisions will apply.
Existing income tax losses can be set off against future property business profits chargeable to corporation tax, but will not be available for group relief or use against other profits and will have to be tracked separately.
Non-resident companies will have to comply with the different filing and payment regime of corporation tax – including the requirement to submit returns and computations online in iXBRL format.


As can be seen, the proposed changes are quite wide ranging and could have a major impact on non-residents with UK property interests.

If you have non-UK resident clients, it is probably worth speaking to them about the changes as soon as possible. Things to consider include:

You may want to make clients who will be brought within NRCGT for the first time aware that any disposal after April 2019 may give rise to filing obligations and tax so they can plan accordingly. (This may include obtaining an April 2019 valuation for rebasing purposes.)
Would you be able to spot if a non-resident client made an indirect disposal subject to NRCGT?
Do you have a system in place to ensure clients inform you of relevant disposals as soon as possible so that they can meet the 30-day payment and filing deadlines?
For non-resident corporate clients with a UK property business, you may want to flag up the change to corporation tax in 2020, and what this will mean in terms of administrative burdens and costs.

Author – Emma Rawson is technical officer at the ATT. ATT Technical Officer
Date published August 6, 2018