22-week property transaction replicated in 10 minutes
By Nicola Laver
A “shadow” conveyancing transaction has been completed in less than 10 minutes following a ground-breaking digital project
A “shadow” conveyancing transaction has been completed in less than 10 minutes following a ground-breaking digital project supported by HM Land Registry.
It was the result of a co-ordinated project between Mishcon de Reya and other organisations including Land Registry, which replicated the conveyance of a semi-detached Gillingham property which took 22 weeks to complete.
By building a distributed ledger technology (DLT) based prototype to enable a digital property transfer that automatically updates the land register, the test case reduced the time taken to minutes.
Land Registry’s role included creating a DLT-based application built on the Corda platform.
The team established the transaction participants as transaction nodes – each of which were able to execute smart contracts pertaining to their role in the transaction to enact changes on the ledger.
DLT-based smart contracts are capable of being enforced under UK law.
Land Registry also provided the “single source of truth for the system to rely on when determining land title ownership” at a given time.
Nicholas Kirby, a legal director at Mishcon, said real estate transactions are currently slow and buyers and sellers can find the process stressful and uncertain.
“This is especially the case where transactions fail or are abandoned at great cost”, he added.
“It is possible to use blockchain to make it easier for conveyancers to reduce the amount of repetition in the buying and selling process, collect better data and improve access to it.”
He said this will help conveyancers deliver a faster more transparent service to clients.
Despite the success of the test transaction, a white paper published by Mishcon - which explains the process involved - says there are “several barriers” preventing DLT becoming mainstream.
These include “a lack of awareness, certain technical limitations and issues, and what has been perceived as a lack of legal and regulatory clarity”.
Eddie Davies, Land Registry’s deputy director of digital services at Land Registry, said DLT “should be invisible to citizens and I think what it will mean for them is a home buying process that is more straight forward, easier and less full of stress.
“It’s an emerging technology that offers a good opportunity for the industry to explore further”.
Mishcon said the shared ledger “allows real time visibility as to the progress made on the transaction at any point – promoting greater transparency within the industry, where long chains can be opaque and hard to follow”.
They are now working on other potential applications of DLT to the real estate sector.
Kirby commented: “Technology, and especially blockchain, has the potential to play a huge part in revolutionising this process and to bring much needed certainty to buyers and sellers earlier on in the transaction.
“If we can turn this real-life application of blockchain into reality it will be of significant benefit to anyone buying or selling real estate assets in the UK."