When Professor Andrew Baum’s PropTech 3.0 report was first published, a small event was held to celebrate the very first academic report into technology’s impact on the property industry.
In said report, Professor Baum states that blockchain is set to have the most profound impact, compared to other technological innovations, on the world of property.
I, with my ego strapped firmly to my lapel, got up and told everyone that I disagreed with the honorable speaker to my left; “it will be at least a decade before we see blockchain have any real impact on property”, I said. Well, here we are two years later and it seems I might have been wrong...
A press release from the government, last week, announced that Her Majesty’s Land Registry (HMLR) “is exploring how blockchain technology could be used to provide quicker and simpler services” as part of the “second phase of HMLR’s groundbreaking research and development project, Digital Street”.
Digital Street was set up to “explore and visualise different ideas of how land registration might work in the future and make conveyancing simpler, faster and cheaper”. This interest in blockchain is a key part of that ongoing process which will see the government work closely with the industry to better understand how the “innovative use of blockchain, distributed ledgers and smart contracts, could revolutionise the land registration and property buy-sell process.”
Graham Farrant, chief executive of HM Land Registry, said: “Our ambition to become the world’s leading land registry for speed, ease of use and an open approach to data requires HM Land Registry to be at the forefront of global innovation in land registration.”
In order to achieve this lofty goal, HMLR is partnering with software company, Methods, which, in turn, will utilise a blockchain platform called Corda, created by R3 to “record, manage, and execute institutions’ financial agreements in perfect synchrony with their peers, creating a world of frictionless commerce”.
David Rutter, chief executive officer of R3, said: “Blockchain holds the potential to transform land registry services by improving speed, simplicity and efficiency. We will be working closely with HM Land Registry, Methods and our partners over the coming months to turn this potential into reality.”
And that, to me, is the crux of this story - turning potential into reality. Just because something is theoretically possible, or even proven to be practically possible, applying it to something as vital and vast as HMLR is an entirely different feat, one which may yet take years to achieve; or at least to replace what we already have in existence entirely.
Blockchain breaking borders
Years to achieve but, it seems, already well under way. Another press release, this time hot off the press from global PropTech company, Propy, tells us that it has completed its “first blockchain-powered transaction” in the EU property market.
“The sale, in Seville, Spain...marks Propy’s official introduction to Europe. Both the Spanish seller and French buyer used cryptocurrency (ETH-ETH) to transfer property ownership via Propy’s transaction platform.
“The Silicon Valley-based company has already facilitated cross-border sales in the US and
Eastern Europe...this transaction marks an important milestone and a first step into entering other European markets, including the UK.”
Natalia Karayaneva, chief executive officer of Propy, said: “Blockchain technology continues to revolutionize the way people buy and sell properties across borders. The EU market can be a complex web of governments, brokers, and other entities making international property transactions difficult. Propy’s blockchain-enabled platform removes complexity resulting in a simple online transaction that is easy to complete and secure.”
The most exciting words here are ‘across borders’: in this case we have a person in France buying property in Spain. I can speak from experience and say that the process of cross-border property transactions is historically, to borrow one of Angela Merkel’s favourite terms, a sh*tstorm. Long, drawn-out, complex, convoluted, meandering, expensive, frustrating, and, it now seems, totally unnecessary.
We live in a global society, regardless of what the current political discourse tells us. Any steps towards eliminating friction in the pan-global property market is excellent and essential.
Education and evolution
The announcement from Propy has led the UK PropTech Association (UKPA) to predict that blockchain powered property sales in the UK will increase.
Managing director, Sammy Pahal, said: “This Propy transaction is a really exciting step forward for the PropTech industry. Quite often we talk about new technology...and try to educate the industry on the impact it will have, but often it is seen as hype or something which is a long way off. However, there are now successful examples of blockchain being used in buying and selling property... moving the whole conversation along.”
Despite all of this, I think I’m going to stick to my guns and say, once more, that I think we’re still at least a decade away from blockchain taking real effect on property transactions - at least until we are all completely behind a blockchain-based solution.
Yes, the conversation is certainly moving along, but it will be a long time before it gets to where it hopes to be. The approach will, for the meantime, remain a private-public initiative where the government uses innovation from private companies to run alongside the traditional registry.
For many, the attitude towards land registry remains, ‘if it ain’t broke, don’t fix it’, a phrase which has reverberated around many of the conferences and events I attended these past couple of years.
I do believe, however, that we are witnessing the start of a generational shift in how we deal with land registry titles and I believe it is being largely triggered, at least on the public side, by the small dents that have started appearing in the armour of our centralised system; dents caused by fraud, cybercrime, and inefficiency in the spotlight of global industry transformation.
The government officially backs blockchain, and private companies like Propy are forging a path by demonstrating exactly what is now possible. As for blockchain becoming the land registry norm, I think we still have a way to go.
Having said all of that, I was notified by Propy that it’s looking for UK representatives to partner with some ‘Propy Ambassadors’ here in the UK. If you’re interested, please drop them a line. They would love to talk to you I’m sure. And then you can feedback to me on anything exciting that happens, deal?
*James Dearsley is a leading PropTech influencer and commentator. You can follow him on Twitter here.