The HM Land Registry's Digital Street project, for example, aims to explore how new technologies like blockchain can help develop a faster and cheaper land registration process. Earlier this year, it successfully tested a prototype blockchain as a means of speeding up the conveyancing process on a house transaction in Kent. This signals how the whole process of buying and selling properties could end up online in the coming years.
Why Are We Seeing the Digitalisation of Property Transactions?
There are many reasons why new technologies are emerging for use within the real estate sector, including:
- Speed - digitalisation will break down paper barriers and solve the causes of delay. The Land Registry's Digital Street initiative means that blockchain will help to complete property transactions in a matter of days, if not instantly.
- Accessible information - in an age where instant access to information has become the norm, buyers and sellers also expect property transactions to be fast and transparent. Digitalisation will provide them with direct access to information concerning their property transactions.
- Cost - digitalisation will reduce the costs involved in the conveyancing process. Social media channels have even been used to promote property. In January this year, the first sale of a building on Instagram via a developer took place.
What Are the Barriers to Change?
It is clear that the digitalisation of property transactions is in response to significant issues within the current system. Despite this, barriers exist:
- Regulation - those offering technological solutions must work within the existing regulatory framework. The government has changed some legislation to assist digitalisation. In 2018, for example, it changed the Land Registration Rules to enable digital land registration. Changing legislation to aid innovation is a slow process, however, and current tech developers cannot bypass the existing law.
- Data security - digitalisation means that data security and protecting against the threat of cybercrime are paramount among property professionals. This involves significant costs and ensuring that those working within the industry are trained to deal with the implications of the digitalisation process.
- Cost - the costs involved in transitioning from paper to digital are significant. This is an obstacle which many organisations within the real estate sector will struggle to overcome.
- Conservatism - developing new technologies requires access to data which can be difficult to obtain due to the client confidentiality obligations applicable to real estate professionals.
Despite these barriers, it is clear that the digitalisation is happening within the real estate sector. A 21st Century view must be embraced by property professionals to provide the public with a more streamlined, transparent and cost effective service fit for the digital age.
If you are interested in any of these issues, Will Cotterhill, a Solicitor in VWV's Real Estate Team, will be discussing the implications of the digitalisation of property transaction for clients and their advisers as part of our upcoming Autumn Commercial Property Update seminar.
The seminar will take place on Wednesday 18 September 2019 in our Bristol Office and on Thursday 26 September 2019 in our London office.
To register your interest in the Bristol seminar please register here, or in the London seminar here.
For more information on property transactions, please contact Jon Durham in our Commercial Property team on 0207 665 0931.