Data: Strong use case
Using smart data in the homebuying process could generate over £14bn for the UK over a 15-year period, the Department for Business and Trade (DBT) has estimated.
Researchers said property could be “a priority sector” for implementing a smart data scheme because it promised the “largest benefits” of any of the five sectors studied.
“Our analysis suggests this use case could offer a sizeable boost to the UK economy” over the period from 2028 to 2043, they said, stemming from “increased efficiency, reduced transaction failures, and improved market liquidity”.
The DBT said homebuying “could be a priority sector” for implementing a smart data scheme, because it offered the largest benefits both in terms of net social value and GDP.
The other sectors studied in the Economic analysis: understanding the costs and benefits of smart data use cases [1] were digitising trade finance, consumer experience of online groceries, supporting green home upgrades and verified electricity emissions reporting for SMEs.
Researchers described smart data schemes as “the overarching governance and technical frameworks that enable secure, standardised sharing of customer data within specific sectors of the UK economy”.
The main focus of their analysis was to determine what the potential net value to UK society of implementing each use case over 15 years.
The use case in homebuying envisioned an authorised third party enabling “real-time, secure sharing of verified property information” by providing digital property packs to homebuyers, property service providers and mortgage lenders.
This property pack could include material facts at the point of marketing and additional legal information.
“By streamlining data flows between key stakeholders, this initiative aims to reduce transaction failures, cut costs, and enhance market liquidity.”
For conveyancers, the benefits were faster transaction cycles, increased productivity and streamlined processes, as well as fewer failed transactions and “increased price of services reflecting value-added services”.
More broadly, the top three benefits were greater efficiency in property transactions, fewer failed transactions and “enhanced liquidity for financial services businesses”.
The top three costs centred on the cost for government and local authorities of digitising and maintaining data and the need to create APIs to facilitate data sharing.
There would be “large implementation costs” and “substantial investment” would be needed from HM Land Registry and local authorities.
Researchers estimated the benefit from smart data for estate agents and conveyancers at £6.1bn, driven by “efficiency gains and fewer failed transactions”, and for consumers at £1.73bn, thanks to a “smoother homebuying and selling process, reduced stress and fewer failed transactions”.
Financial services would gain £1.7bn as “freed-up capital from reduced mortgage transaction failures enables reinvestment”.
Government bodies would face costs of £765m for digitisation and running costs, while the estimated costs of the smart data scheme itself were put at £260m.
Meanwhile, authorised third parties would gain £920m in revenue from managing secure data-sharing platforms and the “whole economy” a total £4.66bn from “improved market efficiency and spillover effects”.
The grand total of costs and benefits came to just over £14bn.
Researchers added that “a particular area of uncertainty” was “the pace of local authority digitalisation, which is essential to realise the benefits of smart data within the property sector”.
But simply digitising property records without a coordinated smart data scheme would not deliver the potential benefits, the study warned.
Stephen Ward, director of strategy at the Council for Licensed Conveyancers (CLC), commented: “This careful analysis shows the value of the work that is underway to transform home buying and selling in England and Wales.”
The CLC was awarded almost £750,000 [2] in government funding in October last year, in partnership with the Open Property Data Association and open banking pioneer Raidiam, for a project aiming to transform the homebuying process by digitising data and enable secure sharing among all the parties involved in a transaction.
The project has issued a call for more conveyancing firms to become involved.