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property market housing futures Blockchain

How blockchain technology could revolutionise the buying & selling of property

Q1 2019

Blockchain technology is already poised to revolutionise the banking industry, but how will it affect the property market? This article will examine how buying and selling property could be transformed by this new technology.

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Vanessa Hale

Director, Research

+44 20 7318 4675

Blockchain technology has been available for a decade, but its integration into the mainstream has only taken place in the past few years. Many of the world’s largest public companies, as well as several governments, are currently exploring how the technology could transform industries such as manufacturing, healthcare, and financial services. The property market is also likely to be revolutionised by the technology, but precisely how is still unclear.


What is blockchain technology?

A blockchain is a type of distributed ledger technology. In its simplest form, it is a digital database which records transactions, such as the transfer of money or other assets, between two or more parties. Each transaction is independently verified by a network of powerful computers all over the world. Once a transaction has been verified and logged on the blockchain, it cannot be removed.


Why would it be useful for the property market?

Blockchain technology could revolutionise the way in which property data and transactions are handled. The main draws of the technology are its transparency; its speed; and its ease of use.


  • Transparency

One of the most ground-breaking aspects of blockchain technology is its transparency. As everything on the blockchain is publicly visible, all parties involved in a transaction have access to the same information.

Whilst this may not simplify price negotiations between buyer and seller, it will help to reduce the likelihood of misunderstandings around the details of the property and agreements made.


  • Speed

Blockchain allows secure transactions to take place without requiring a central authority to carry out or authorise the transfer of an asset. This could significantly decrease the amount of time it takes for a property transaction to take place.

Additionally, as the system automatically verifies all the parties involved in a transaction, the checks necessary for property sales could be resolved much more rapidly.

In order to rent a property or get a mortgage, you must verify your identity with multiple documents, and provide evidence of your financial standing. If you own the property, you must possess land registry documents, energy performance certificates, environmental reports and a whole host of other forms and papers to consider.

This could all be resolved with the use of blockchain technology. Documents can be encoded on the blockchain and will be held in perpetuity, allowing all parties to access the documents whenever needed.


  • Ease of use

Say goodbye to pen and paper – in the future, you could be signing your mortgage digitally and acquiring your new home using a smart contract.

Smart contracts are computer-coded, self-executing contracts. They define the rules and agreements for a transaction in the same way as a traditional contract, but they also automate the process of fulfilling the contract. Smart contracts can be signed instantaneously with a digital signature, and the resulting transaction – such as a property sale – is carried out and the deeds exchanged, all in one act.

At the moment, smart contracts can only handle payments in cryptocurrencies, such as Bitcoin and Ethereum. And although there have been a few cases of property being sold on the blockchain, this is not likely to become a common method of selling property in the near future.


How does the government view blockchain technology being used in the property market?

At present, the technology’s usage hasn’t been included in property legislation. However, the UK government does see smart contracts potentially being used for property transactions in the future.

In April 2018, the HM Land Registry, the protector and guarantor for property rights in England and Wales, enabled the first digital mortgages with their new “sign your mortgage deed” service. The Digital Street project aims to take this further, and explores how blockchain technology and smart contracts could streamline the land registration process.


When will the property market use blockchain technology?

There are still many hurdles to overcome before blockchain technology becomes a routine part of buying, selling and renting property. But at the rate this technology is developing, we may see it creeping into the housing market in the next few years.

Our latest report, Housing Futures: New Horizons, explores how new technologies such as blockchain, artificial intelligence and virtual reality will transform the housing market over the next decade.