‘Archaic’ property transfer process could benefit from blockchain
Few can argue that there are elements of the property transfer process that need improvement, and modernization could be a huge boost for the UK housing market.
The solutions to today’s problems in the process of buying and selling a home in the UK do exist, many experts say, but the industry must work together to implement them and make them a success.
Even before the pandemic, many complained that conveyancing – which involves the legal transfer of title to property from one owner to another – could be slow, arduous and fraught with pitfalls. Most people who have bought property in the UK have experienced hold-ups as part of the process.
Now, a group of industry experts have offered a new round of comments and suggestions on how things could be improved, including using new technologies like blockchain.
Delays in transactions turn people off
According to Lennie Shaw, founder of Shaw Financial Services, one of the biggest hurdles may be mortgage offers expiring when things take too long – at which point mortgage rates may have risen.
He says: “I recently had a deal where the mortgage requested was 1.14% fixed for five years; the offer expired which meant I had to select a new product, 1.92%, all because the chain took eight months to complete, which meant the customer had a significantly higher mortgage payment in due to delays caused by lawyers. »
Shaw adds that brokers are constantly bombarded with clients asking for updates on attorneys, and believes the lack of communication is the biggest stumbling block.
“Currently, the transfer of ownership is not only the weakest link, it is completely broken. We need a root and branch overhaul because the current lags and problems will only get worse without the massive adoption of the technology.
“Recently I negotiated mortgages and received offers within four hours. What good is it when the lawyers will then take another four months, at best, to close the deal? »
How technology could help transfer ownership
Although there has been progress in transferring ownership, the sector is still known for its heavy use of paper rather than digital technology.
Joe Garner, Managing Director of NewPlace, comments, “Technology offers the key to facilitating a path of least resistance, even in a notoriously slow and convoluted area like conveyancing. We need more communication, faster action and more transparency until delivery.
“Less reliance on human back-office staff would result in a smoother process across the board, reducing errors and inefficiencies that invariably increase the time it takes to complete the transport.
“Disconnected transfer agents that rely on old ways of working don’t incorporate the kinds of technology demanded by customers, intermediaries and lenders, and should be a thing of the past.”
He concludes that the transfer of ownership needs “the kind of treatment that Stripe gave to payments and Amazon blew the e-commerce world to smithereens.”
Blockchain is of course best known for its use in the cryptocurrency space, with the likes of Bitcoin and the like acting as a new way to buy and sell securely. However, its uses are much more varied and could be the key to improvements in the industry, according to some.
Simon Shinerock, president of real estate agency Choices, says: “Technology is definitely the answer, but to work it needs to be integrated and everyone in the game needs to have access to the system.
“The technology already exists to link buyers, sellers, agents, transfer agents, lenders, mortgage advisers and local authorities, it’s called ‘blockchain’.
“Yes, blockchain has other uses than creating useless cryptocurrency Ponzi schemes. There’s even a company called Coadjute that’s working on a solution and starting to make progress but really, like WiFi for everything the world, this should be a government-sponsored project.
“Unfortunately, it’s not just the technology that isn’t integrated. Government is utterly unable to keep pace with change, let alone respond to it or play a leadership role.
The imbalance of supply and demand is also causing delays in the UK property market, with huge volumes of buyers registered with agents against homes for sale. Mortgage lenders are also busy as people rush to strike deals before further rate hikes take effect.