If you are involved in the buying or selling of residential property in the UK then on many levels you are living through extraordinary times as new regulation, tech and economic realities rip through the industry.
One of the lesser known, but nevertheless momentous developments, is the government’s funding of a major project to improve the home buying process.
Called Digital Street and being organised by the Land Registry, it is currently rolling out its digital mortgage deed signing service across the lending industry.
But it’s also been busy running several ‘dry runs’ using different blockchain technologies to streamline the conveyancing process and, above all for all concerned, make it faster.
As Dealmakerz has reported before, the promise of faster, smoother and easier property sales delivered by ‘cutting edge’ blockchain tech has been promised for ta very long time.
Many disruptors have claimed to be augurs of a revolution, promising to deliver home purchases in weeks rather than months, increase liquidity within the housing market, shrink costs for all concerned and help developers and estate agents increase their turnover.
And yet the seismic shift promised by platforms such as ViewMyChain and others, although technically astounding, has not really happened.
Lenders, solicitors and the Land Registry have all been understandably nervous about rushing into unchartered registry, financial and legal waters.
But finally, last week, progress was made. The Land Registry’s much-talked-about Digital Street project has now completed on the sale of a house in Gillingham, Kent in partnership with lawyers Mishcon de Reya and Premier Property Lawyers, Barclays, payment safety platform ShieldPay and identity checking app Yoti.
The semi-detached house was sold at the end of March in the traditional manner, but the key parts of the process were also completed in parallel using blockchain tech, mainly to find out what could, and couldn’t be, achieved.
Among the participants DealMakerz has talked to, most predict that pilots like this will start to become more frequent over the next 18 months. John Abbott, the Land Registry’s Director of Digital, Data and Technology, says it will be two years before the tech is tried and tested enough to ‘go mainstream’.
But it will probably be several years before home buyers and sellers begin to see ‘paperless’ conveyancing completed in a few weeks rather than months.
According to Mishcon de Reya, the Digital Street project had two objectives. These were to develop a simpler, faster and cheaper title registration process and to assess how well the Distributed Ledger Technology (DLT) that underpins all blockchain process, really works for property sales.
DLT may sound dull, but its capabilities are dazzling. In this case it helps multiple parties within a property purchase to coordinate their actions automatically in a transparent and secure way.
This includes automating myriad formerly manual tasks including identification of buyers and sellers, proving property ownership, legal contract exchange and transfer of funds.
“The Digital Street initiative is doing a great job of showing the industry what could be possible by using new technologies such as Yoti’s digital identity tehch and blockchain,” says Yoti’s Commercial Director, Simon Charnock.
“I believe the introduction of future technologies into the conveyancing sector will be progressive and incremental, so whilst there may not be a big bang type event, we will see the property transaction process improve overtime in alignment with the development and adoption of technology such as ours.”
One of the key players in the latest pilot by Land Registry was legal giant Mishcon de Reya, which already has a lively in-house programme experimenting with blockchain/DLT and how it can improve legal processes.
“After two in-house hackathons we realised DLT could be used in the conveyancing process and we worked on automating a little piece of the legal contract using the Corda open source smart contract tech,” says Niall Roche, a senior blockchain expert at UCL who has been working with Mishcon on the project.
Roche says he’s been having regular meetings with the different parties involved to take the simplest parts of the Gillingham property’s conveyancing process and replay them using DLT.
“Digital Street, which involves HMRC too, is a good example of a government agency interacting with the private sector in a really open and collaborative way to explore the art of the possible – which is not something that you see often.”Geoff Dunnett, Shieldpay
The parties involved agree, despite its limited scope, the pilot has been a success and that it suggests the home moving process can be cut from approximately 26 weeks (the average) to six weeks
“It can’t cope with complicated scenarios yet, but I can see it having applications early on for simple purchases including new-build apartments within a single block which are all similar,” says Roche.
“The pilot has been a glimpse of the future, and although it’s about improving the process, it’s also about enabling new business models which is why the Land Registry is keep to work with smaller companies on this too.”
One of the other key players in Digital Street is Shieldpay, which is an online escrow account provider.
It says Digital Street has been instrumental because, unusually for a government-organised project, it brought together so many players from within a live transactional market to knock heads together.
“Thanks to the project the stakeholders required to make it happen are here and working together already – we’ve all invested time and our own internal development resource to make this proof of concept possible,” says Geoff Dunnett, its Legal Services Director.
He says like Shieldpay, all the participants in the latest ‘dry run’ took part because they have an eye on it becoming a reality and that; “it is in all of our interests to do that because it is a good thing,” he says.
“The reason we developed our platform was to build trust and transparency in transactions, and often people don’t know where the funds are or what’s happening in the most important transaction in their life, which is crazy.
“We are some way from removing paper from these transactions – but we will see the first contract exchange and completion by blockchain within the year or maybe two years.”
If you’re wondering why all this hasn’t taken place earlier given the huge leap forwards in other areas of the home buying process such as mortgages and portals such as Rightmove and Zoopla, then Dunnett has an interesting theory.
His view is that once the industry has got the customer to the purchase or selling decision, few of the players in the process see any purpose or profit in improving the experience; it happens anyway.
“There has been little incentive for anyone to improve that part of the journey because there’s no financial carrot dangling there,” says Dunnett.
“Digital Street, which involves HMRC too, is a good example of a government agency interacting with the private sector in a really open and collaborative way to explore the art of the possible – which is not something that you see often.”
It is also a matter of national pride. While the UK is a world leader in many things, it doesn’t lead the field in residential property buying and selling. We’re at No.9 for ease of doing business overall but ranked in the mid-40s for ease of buying property, according to the OECD.
According to the minister responsible for Digital Street, Lord Henley, his vision is for the Land Registry, and the UK’s conveyancing process, to become a world leader. It would appear we’re getting there.