In this week's blog, we look at a story hidden in the small print of this week's housing headlines. The topic has an air of inevitability: the complete digitalisation of some of the arduous transactional elements of housing. However, the real story here may be how fast this brave new era can be ushered in. We know the future is coming, and we also know there are seemingly insurmountable problems when it comes to solving the UK housing situation, so could taking more significant leaps of faith along the transformative technology curve be the solution? Are we thinking too "mid-curve", or are we at the other end of the spectrum? Are we inviting too much risk into the system, trying to shrug off long-established normalities? This week, we look at what's been proposed and consider where that could ultimately lead and why.
This week, the government announced that it plans to fully digitalise all the data shared during property sales, remove all holdups within buy-and-sell transactions, and bring house buying in line with other elements of this century. The housing minister has announced that by removing all the documents and paper trails from the conveyancing process, we can create a system where the land registry, conveyancing solicitors and all touch point counterparties in a typical property transaction can settle all business within one system. This will likely strip out considerable time-intensive work that bogs down the current process.
One alarming data point from the previous three years is, according to the Law Society data, hundreds of conveyancing solicitors have left the UK housing market, resulting in the bidding up of prices and the reduction of consumer options. The slowdown in activity in the property market of the post-pandemic era, coupled with a labour-intensive process not particularly well remunerated when broken down into hourly earnings, just wasn't attractive enough to retain the past demand. These sweeping transactional changes would suddenly make the hours v returns metric seem very attractive again, bring more businesses into that space, and provide more choices for consumers to bid down prices via increased competition naturally. Theoretically, the result is a better functioning market for all participants.
So, if this is the beginning of the future, how far can this be pushed, and why should this matter? It wouldn't be unfair to say that slow transactions, high costs, and bureaucratic inefficiencies almost characterise the UK housing market. A fully digital property buying system could revolutionise the market by increasing accessibility, transparency, and transaction speed. This theoretical plan begins with stepping away from the photocopier, putting the second-class stamps back in the draw, and switching on the computer - but as we accelerate away from the mid-curve into the apex of modern thinking, could things exponentially accelerate in a matter of years into property transactions digitised using blockchain technology, artificial intelligence, smart contracts, ultimately accelerating the UK housing market into a new era, and what would that look like?
One thing long proposed is the establishment of a Digital Property Registry. A UK-wide digital property registry would be the foundation for a fully digitised property market. Utilising basic blockchain technology (which, outside of all of the hype and tech speak, is simply an immutable digital ledger backed up by a variety of sources and impervious to malicious tinkering due to the way all of the past entries have to transact with the new) there could be a national database created, an immutable records of property ownership, title deeds, and transaction histories. By eliminating paperwork from the registry, you eliminate fraud; this system would provide buyers, sellers, and legal authorities with immediate access to verified property information; it's almost a perfect fit between the technology and the demand, which is rare in a world where technology is often shoehorned into sectors for technologies sake.
Digitisation would also significantly benefit property developers in our sector. A faster, more transparent property buying process would increase demand for new homes, reducing the time between planning and sales. Embracing technology like AI-driven analytics could help developers identify high-demand locations, optimise pricing strategies, and predict future housing trends in what we know is a viciously competitive market. Furthermore, automated legal and regulatory compliance checks would ensure that new developments meet UK planning permissions and environmental regulations more efficiently, removing significant barriers to entry due to concerns over risk and overspending at the birth of a project.
So, what can we conclude from this? We need to start thinking differently as a country and a sector in our approach to the housing issue, so we fully support the proposed digitalisation if it can be implemented and are excited as to where it could lead. The very mantra at the heart of any exploratory and disruptive fintech business is this: "Doing things because that's the way they have always been done, is not a reason to continue to do something", and this sort of rhetoric plays very well within our sectors existing values, we are in the business of change.
Digital tools facilitate quicker access to financing and allow developers to begin projects without delay by reducing bottlenecks in the buying process. Adopting complete digitisation would accelerate sales and incentivise further investment in the UK housing market, fostering growth and sustainability in the property development sector and bringing the industry fully online, which is where the exciting fintech businesses want to take the market in the coming years.
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