Blockchain technology could make the UK real estate market more accessible to first-time buyers by enabling part purchases of property, it has been claimed.
Cryptech, a blockchain technology investment firm, said blockchain will bring in a new level of transparency that attracts global players and opens up opportunities to first-time buyers.
Cryptech director Omar Jackson suggested one of the biggest opportunities is using blockchain to “tokenise” real estate assets, meaning an investor can purchase parts of a property rather than the entire property.
These parts could be traded online, making UK real estate more accessible to investors.
“We believe this will become a major new trend in the industry this year, especially for first-time buyers who are often priced out of the market,” Jackson claimed.
The offshore company, which was recently acquired by private equity firm Berkeley Assets, believes the simplification of real estate transactions will allow assets to be more efficiently and securely traded, invigorating property markets and improving the overall liquidity of the industry.
This, in turn, could solve the main downside of real estate as an asset class.
“Blockchain can be used to transfer ownership of individual properties quickly and securely, making it more transparent and attractive to investors,” said Jackson. “We will see huge costs removed as a result of a more streamlined process because blockchain can also be used to manage tenancy contracts, payments and maintenance across a portfolio of properties, or one individual property.”
DMZ thinks the next 12 months could see an array of projects and investment opportunities that apply blockchain to property.
According to Galliard Homes, property is tipped to be one of the earliest industries to adopt blockchain, largely because transactions in this sector are often multi-layered with numerous stages and parties involved.
It is thought that blockchain and the process of creating “smart contracts” may not only be limited to the process of buying and selling, but could also be used to employ other actions such as terminating leases and charging rents.
It costs the Land Registry around £10 million per year to compensate homeowners who have been the victim of property title fraud. By using blockchain, the transparency and permanence of these transactions would leave little room for violation.
The first house in the UK to be sold using a blockchain system took place earlier this year in Manchester, with all stages – from the initial offer through to the exchange of contracts – recorded on the ledger. Once complete, the deeds, mortgage information, land records and any other collateral data will be held perpetually, which could speed up the process when the owner decides to later sell on the property.
Meanwhile, the end of 2017 saw the first UK property sold in Bitcoins, and more and more homes are now cropping up on the market with the option to buy or sell using the digital currency.
Huge challenges remain, however, from complying with data protection laws to accurately transferring Land Registry data and bearing the brunt of the costs of implementation.