The digital deed: what will the digital mortgage mean for property transactions?

Posted by Andrew Lloyd, managing director of Legal Futures Associate Search Acumen

Lloyd: Frustrations are growing with the current system

Over the past 20 years, nearly all aspects of our financial lives have migrated online, from tax returns to banking. Yet arguably the most important and protracted financial process in our lives has remained doggedly devoted to the paper based world.

A single signature in Rotherhithe, south-east London, on 4 April, however, may have just lit the touch paper for transforming this process. By signing the UK’s first ever digital mortgage through the government’s new “sign your mortgage deed” service, a signal was sent that the home-buying process is finally on course to be digitised, simplified and streamlined.

A process once dependent on the efficiency of the postal service is now on the path to being transformed to the click of a button, expected to cut the length of the home-buying process down by days.

While the tangible benefits of this new digital development should not be overlooked, what this breakthrough signifies for the broader industry is even more significant. If mortgages can be digitised, why not the whole process of buying or selling a home?

UK homebuyers are the world’s most digitally active house hunters, with 93% using online channels to research prospective properties. With such online engagement at the outset of the process, it’s not beyond the realm of possibility that the UK can play host to the world’s most digitally active property buyers or sellers.

Frustrations are growing with the current system, in a day and age where instant access to online information has become the norm.

It is entirely understandable that consumers are becoming impatient with the ‘snail mail’ speed of the home-buying process and expect something quicker and more suited to the 21st century.

Recent analysis of legal complaints data found that, in the nine months to December 2017, 20% of complaints resolved by the Legal Ombudsman were about property conveyancing delays, double the figure in 2016.

While the digital mortgage is welcome, we expect it won’t be long until calls are made for further digitisation of the transaction process. Thankfully, this change is already in the pipeline, with Land Registry’s Digital Street initiative exploring digital conveyancing and the potential of blockchain to complete property transactions in a matter of days, if not instantly.

We’re also seeing a rise in online estate agents and robo-mortgage brokers, both breaking down the paper barriers that are hindering the house-buying process.

Buyers and sellers will have no hesitation in embracing a new digitally driven transaction process once it arrives, providing the user experience is safe, secure and designed with today’s customer – and tomorrow’s customer – firmly in mind.

Future-proofed products (I would point to our Commercial Real Estate platform as an example) can already put property lawyers and conveyancers in control of an increasing array of data, by presenting clear insights rather than leaving them grappling with the frustrations and limitations of retro-fitted software.

To meet changing client demands and ensure they remain ahead of their competition, lawyers and other property professionals must therefore start embracing this 21st century vision of property transactions, today.

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