The digital transformation of housing: from rent to subscription

In April 2017, Bedly raised $2.7 million in seed funding and has been expanding rapidly. With more than 1,000 tenants and rentals across New York and Boston, it positioned itself as “the first online platform for comprehensive rentals.” It promised hassle-free, flexible housing for both renters and landlords. Its lead investor, Accomplice, said Bedly could become the world’s largest landlord without home ownership. However, rapid growth led to financial problems and competition intensified. In 2019, Bedly abruptly ceased operations, laying off most of its staff and leaving hundreds of tenants without valid contracts.

Bedly embodied the question of whether housing can be “platformised” (similar to short-term rentals on Airbnb or taxi rides through Uber). In a context of increasing digitalization and financial speculation in rental housing, the real estate sector is increasingly attracting tech companies and investors. Co-living, private shared rental housing with technological ambitions, offers a specific perspective on these digital experiments. Many of the companies that have emerged in Silicon Valley are operating as start-ups, using a “Space-as-a-Service” business model – managing space through apps, cloud, IoT and artificial intelligence. In doing so, they are bringing together traditional financial players with technology innovators, opening up the question of what happens when digital platforms merge with corporate real estate leasing.

What happens when platforms meet corporate ownership of real estate

Co-living draws inspiration from the concept of the “platform” – the ideological and economic model of contemporary capitalism. While platform capitalism has been criticized for its overemphasis on novelty, it helps explain how technology firms are redefining the housing market. Platforms combine technology with existing structures and seek a strategic position in the network through which they control access to real estate, collect data and extract rents.

Data is a key asset: it is used to profile and manage people and things, turning platform brokerage into capital gain. Platforms also seek dominance through network effects and scalability – typically with a ‘winner-take-all’ ambition. Having achieved the position of necessary intermediary, they then levy a ‘tax’ on every transaction that uses their infrastructure.

Aiming for maximum efficiency and minimising friction areas – through automation, digitalisation and low-cost labour – is also key. Co-living companies, inspired by Uber and Airbnb, are aiming for a similar “frictionlessness” in housing.

Platform rental strategies build on a variety of technologies – from smart devices to financial tools to legal technologies such as intellectual property rights. These strategies are particularly supported by venture capital, which seeks market dominance regardless of business fundamentals – relying more on technology “stories” and speculation. Many co-living companies were funded in this way in their early days, building on the visions of global technology giants.

The combination of platform strategies with corporate-managed renting represents a meeting of two forms of rental housing – both benefit from asset creation based on expectations of future profits, both are fictional, narrative and require exclusive access through fees or rent. The research challenge is to understand what happens when these models come together – for example, in co-living. Nethercote’s (2023) study shows that tenants face a ‘double fence’ – physical (rent) and digital (data collection). Gil et al. (2023) describe ‘polyplatform tenancies’, where digital platforms allow flexibility to change the rental regime and circumvent any regulations designed to protect tenants.

This study explores co-living as a laboratory setting for two types of digital lease extraction “experiments”. These experiments are not stable – they are inconsistent and often fail. However, they are based on a fundamental tenancy principle that remains at the heart of rentier logic.

Experiment 1: Rent optimization

In the era of digital technology, collecting data on tenant behaviour has become a key tool for maximising property returns in co-living. Using sensors, software (e.g. Salto Systems) and motion tracking, unused or underused spaces can be identified and their use optimised. This approach is reminiscent of the logic of hot-desking, where one does not unnecessarily block space that no one is using at the moment.

Investors and operators are looking at how much time people spend in private versus communal areas, and based on this they are reducing the size of private rooms in favour of shared areas, for example. The goal is to minimize the “unproductive” parts of the building and maximize the return on each square meter.

In addition to physical redistribution, dynamic pricing tools are used – similar to Uber or Airbnb. Algorithms track demand and tenant demographics, and adjust the price of rooms accordingly. Automated systems also streamline lead generation and ensure consistent occupancy.

These practices reflect the ideology of Silicon Valley: to turn any unused space into a source of revenue. Digital lease optimization is thus a combination of technology and real estate capital that results in maximizing yield through close monitoring, rearrangement and disposition of space for lease.

Experiment 2: Subscription to housing

Some co-living companies are starting to introduce business models reminiscent of software-as-a-service principles – easy entry, harder exit and monthly payments. Investors see this as an opportunity to create a subscription to living across locations while collecting recurring payments and user data. Instead of traditional rentals, tenants become “members” who pay extra fees to access platforms, communities, benefits or flexibility within the property network.

For example, Outsite requires a $149/year membership, Habyt charges €150, and offers access to a digital community, benefits, and “exclusive” sites. Products such as Selina’s Colive Flex or Starcity Transfer allow flexible moving between sites, much like Spotify allows access to music – a unified experience across locations.

The goal of these platforms is not just fee income, but to keep customers in the ecosystem through various life situations. Companies like Bungalow allow for the transition between apartments depending on income or location, increasing client loyalty and longevity in the system. In doing so, they leverage data from user behavior to optimize offerings and maximize returns.

In the background is the logic of scaling up and creating digitally mediated housing, where property ownership takes a back seat. Inspiration from Big Tech firms is manifested in the building of ‘enclave rentals’, closed systems that control access, conditions and data. ‘Membership’ thus often becomes a tool of exclusion, privatisation and deregulation – marketed as flexibility and global community, but in fact often built on temporariness and uncertainty.

Conclusions

This article explores current developments at the interface of digitalisation and rental housing through a case study of the co-living sector. It represents a specific combination of strategies of corporate landlords and digital platforms – from rent optimization to efforts to turn tenants into paying ‘members’ or ‘subscribers’.

Lease optimization means maximizing revenue per square meter and full capacity utilization. In contrast, the membership concept seeks long-term user engagement and the use of their data. These experiments build on and further deepen the power relationship between property owner and tenant – often in a highly uncertain and overpriced rental environment.

Digital tools not only enable a new way of collecting annuities, but also extend them into virtual space. Membership can thus mean additional fees, data collection and dilution of tenancy rights under the guise of flexibility and innovation.

In the future, it would be useful to explore the specific impacts of these experiments on tenants – for example, how data is used to maximise profits, or what virtual communities these platforms actually create, and who they exclude.

By Tim White, PhD, From tenants to subscribers: digital experiments in residential rent extraction, Digital Geography & Society, Volume 7, December 2024.

Original source of the study: https://www.sciencedirect.com/science/article/pii/S2666378324000278

About the author

Dr. Tim White
Sociologist and researcher with a focus on housing, land and political economy. He is a Leverhulme Early Career Fellow at Queen Mary University of London and has worked with the LSE, the Technical University of Vienna and the Free University of Berlin. His work connects questions of property, financial strategies and inequality, with a current focus on the role of digital technologies in housing and land. He has published in academic journals and media outlets such as The Guardian.

Abridged for the purpose of research perspectives by Jakub Salát.