The use of blockchain software in the end-to-end conveyancing process came a step closer when a worldwide trial involving international law firms and banks found the time taken to transact properties could be cut from months to weeks.
Simulating property sales over five days, it is said to be the first global blockchain trial focused on consumer products and is an example of digital ‘proptech’ being deployed to transform a partly paper-based process.
The trial, conducted by start-up company Instant Property Network (IPN), is unusual because the platform being tested does not store data but integrates participants’ own technology, meaning the question of the compatibility of different systems is side-stepped.
The trial, which claimed blockchain would improve the security and transparency of transactions, covered 40 organisations in 23 countries, across five continents.
Major law firms participating included Ashurst, Baker McKenzie, Clifford Chance and Squire Paton Boggs, with banks such as Royal Bank of Scotland, German bank Commerz Real, and Austrian bank Raiffeisen Bank International.
According to a statement, the trial “showcased how duplications and costly reconciliation processes could be removed from the buy/sell process, with the first transaction taking less than an hour to complete”.
It concluded: “It is estimated that, with the addition of off-ledger business process and consumer decisions, the end-to-end buy/sell process could be reduced from over three months to less than three weeks.”
It was estimated that efficiencies demonstrated could save as much as $160bn (£122bn) a year globally.
IPN said it was working with HM Land Registry on its Digital Street project.
A note of scepticism was sounded by Rob Hailstone, managing director of the Bold Legal Group, a national network of over 650 high street law firms.
He said: “If this new system can deliver half the benefits being claimed, then for once we can use the often quoted but never delivered upon phrase, ‘game changer’.
“Having been around the conveyancing block a few times now, I will believe it when I see it.”
Also, Neil Singer, the chief executive of online conveyancer ClicktoPurchase, was doubtful that data inputted by individual parties would be properly validated, or that a global system would comply with local laws.
He said: “I hear a lot about trading worldwide using distributed ledger technology but I am yet to see one which deals with the local law requirements.”
However, Christian Woodhouse, head of data and strategic products at Search Acumen, the land and data provider which took part in the trial, said: “This has far reaching potential to turn the entire home buying and selling process on its head, forever…
“The results will help transform the current antiquated transaction process into one that’s modern and technology-driven, where information is automatically verified and shared securely.
“The… trial has immense benefits for commercial property lawyers in particular, who want to be on the cutting edge of proptech for large corporate clients and developers”.
John Reynolds, founder and chief executive of IPN, said: “Increasing trust, speed and efficiency is just the first step. The IPN network will allow organisations to build their own applications, which should vastly improve the customer experience.
“Eventually, we believe it will enable the tokenisation of property, which will fundamentally change how property works as an asset.”
Tara Waters, a partner at Ashurst, added: “The IPN trial has demonstrated the efficiency of enabling multiple parties to work on a single property transaction using a shared technology platform…
“The addition of distributed ledger technology to residential conveyancing enhances transparency, trust and certainty in a process that for many can seem opaque, inefficient and outside of their control.
“We believe that the success of the… trial represents an important first step towards the digitalisation of the wider real estate sector.”
For Matt Taylor, head of UK proptech at Clifford Chance, “the future of the industry is for all to operate across a common platform, and benefit from significant gains to efficiency and transparency”.