The UK Proptech Association predicts that blockchain-powered property sales in the UK are set to increase, following an announcement from global blockchain real estate platform, Propy, that it has completed its first European transaction.
This year has already seen blockchain begin to penetrate the UK property market, with the first residential property sold via blockchain in March, as well as the first AI-powered blockchain property auction, which took place earlier this month.
We spoke to Andrew Lloyd, UKPA board member and managing director of property data company Search Acumen, about the impact blockchain will have on the UK real estate industry.
Andrew has more than 17 years’ experience in the online property technology and data sector, with a keen focus on using proptech applications and data to optimise and empower businesses to improve their performance.
Do you believe blockchain deserves the hype it’s received in the past year, or is it just another techy buzzword?
Absolutely, yes. I am an advocate. I think it has this potential to remove a lot of the frustrations of many of our systems. It enables the user to be in control of his or her own personal data without having to rely on a big third party conglomerate.
Ultimately, using blockchain for buying and selling property means the process of moving would be governed by how long you wanted to take, rather than any third party elements such as waiting for funds to clear or the other side to respond.
There’s a lot of jargon around blockchain right now. How would you explain it?
Essentially, blockchain is a distributed ledger network technology that was created back in 2008 to support cryptocurrencies like Bitcoin in an attempt to replace the existing banking system. Its creators wondered if it would be possible to manage a currency without the need for a trust intermediary, such as a bank. So the blockchain is a digitally encrypted network of computers that will keep your ledger of data or information without the need for any third party to be involved.
People started to see that blockchain didn’t have to just be used with currency, and it wasn’t just the token that was valuable. You could store within this ledger all kinds of information and have it in this transparent and immutable record system. You can apply this to supply chain, to property tokenisation, to records and ledgers of property ownership and more.
In the same way that the Internet was originally a network for American universities to communicate, blockchain has now moved far beyond what it was intended to be. We now find ourselves talking about the art of the possible rather than what it was originally created for. The potential is huge.
What are some of the best examples of blockchain usage in the industry you’ve seen so far?
We are in the very early days of using blockchain in any kind of industry. There are some good examples outside the property sector, such as the original use for Bitcoin and Etherium, as well as blockchain in trading stocks and shares.
You can see a live example of blockchain usage in property in HM Land Registry’s Digital Street project, where they are starting to use a digital property register for automatic due diligence, where each part of the transaction is secured through blockchain.
Why should those involved in property sales be investing in blockchain processes now?
If they don’t somebody else will. Companies who have large market share and don’t keep pace with the changing technology, and don’t understand that over the next 10 years their consumer base is going to expect to be able to swipe left, swipe right for properties, they will lose out to the young startups. The choice is: do you want to be a Woolworths or do you want to be an Amazon? Never believe someone smaller and keener won’t take the opportunity.
In your opinion, what are the current stumbling blocks in the industry to wider blockchain adoption? How could we potentially overcome these?
It’s not easy for a big corporate to invest in new technology when it has existing shareholders who expect a return on a quarterly basis. Startups don’t have this problem. I think there’s also a fear of change, and hesitation to migrate away from existing revenues. There’s a lack of understanding, particularly at this early stage of the potential of the tech to work to the benefit of the business and not just the consumer. The process we use to buy and sell a house is essentially the same as it was 30 years ago if not even longer. For that reason, agents are asking, why should we change now?
You have to get to the tipping point of adoption for the widest market growth. I think for the first time the pressure isn’t coming from inside the industry. It’s not just home buying and selling that will be changed by blockchain: it’s everything. That’s really why when previously the internal inertia has prevented change, I think now people will be driven out by this new opportunity for startups to build something that completely wipes out the way that people work today.
What are your predictions for the future of blockchain in the UK real estate industry over the next 10 years or so?
I think initially we’ll see a few exciting startup businesses. We ourselves at Search Accumen are working on something akin to the property logbook with due diligence information that we are collecting and putting into a blockchain infrastructure. I think we’ll start to see technologies like these creep in and as adoption becomes more widespread over the next decade or so, those individual elements will link together to be similar to what Land Registry is doing right now with Digital Street.
I think by the time we get to 2028 it will become standard practice for property to be bought and sold through this blockchain infrastructure. The potential of blockchain when we add machine learning as well, with its ability to speed up and manage this volume of data and we can trust and manage through blockchain, is huge.
Propy is currently looking for UK ambassadors. You can find more information here.