That’s according to the recently published “The Future of Real Estate Transactions” report, written by Andrew Saull and Andrew Baum from Oxford Saïd.
The report explores common inefficiencies within the current transaction and conveyancing processes in England and Wales, reforms that can be made possible as a result of technologies, and other challenges that can be overcome with digital innovation.
Saull told PlaceTech the aim of the report was to “highlight the reality of the situation” and a central message throughout is that “many start-ups and critics focus too heavily on the adoption of novel products, as opposed to understanding why existing processes are done the way they are”.
Transparency is key
Describing real estate as “the primary capital resource of any economy”, Saull and Baum argue that the systems used by this sector should be transparent, secure and quick.
Britain is currently ranked 47th out of 190 countries on the World Bank’s Ease of Registering Property Index, with six procedures that commonly take 21.5 days to complete and 4.8% of the total property value.
However, the rise of proptech solutions could significantly streamline this process and have a positive impact on the value of investment assets.
The digitisation of data and transaction processes is a great example, allowing computers to automatically execute tasks without human input. Meanwhile, blockchain technology could one day allow “a single, distributed system of recording real estate ownership and transactions”.
While blockchain is a trending area right now, Saull and Baum believe that the dominance of this technology is decades away and will only be possible as a result of regulation and support by industry groups.
A centralised property database
Although technology is improving efficiencies by digitising current workflows and replacing paper-based processes, the authors identified a lack of comprehensive digitalisation that is limiting the automation of complex tasks.
“This has led to seven key causes for delay in the transaction process, which all broadly represent a data storage or transfer issue,” write Saull and Baum.
To solve these delays, the industry should implement an “openly accessible, single pool of up-to-date and standardised property information”, such as property passports, a digital file that comprises of individual property legal and physical data.
According to the report, one way to achieve a single property information database attached to a piece of land is by using geospatial technologies.
Many startup businesses are developing such technologies, but Saull and Baum write that this degree of change is dependent on a centralised land registry.
They say: “Using mapping and satellite technology it is possible to establish an irrefutable plot boundary identifier upon which to link its legal documentation”.
Nexus of tech
When it comes to the preparation and marketing phases, they’re easily capable of digital disruption and innovation. Saull and Baum highlight Internet of Things and geolocation data as technologies streamlining these areas.
“It is conceivable that at some point in time we will rely on automated valuation models with access to digitalised IoT and geolocation data held alongside ownership rights held in a property passport,” they write.
What’s more, virtual reality inspections and viewings are removing risk and uncertainty in the buying process for consumers. The authors continue: “Sellers will have no reason to expect a different price and this first phase of the process will look very different in 2030.”
Although proptech solutions are already proving disruptive, there are other stages of the property transaction process that prove to be more challenging.
In the due diligence phase, the introduction of new technologies is more difficult as a result of “old-fashioned risk aversion and conservatism”. Saull and Baum say contract law changes would be needed to avoid this situation.
“For less complex residential property, if we can imagine the veracity of the data held in a property passport being guaranteed and backed by insurance, then the due diligence phase may be significantly quicker,” they write.
And while a digitised land registry could make the transfer of title quicker and secure, Saull and Baum say it would “require a lot of patience, funding and government will”
They conclude: “The existence of relevant technologies which propose to reduce the time or cost of an average transaction does not mean that they will automatically be implemented. Operational, regulatory and social barriers to their adoption must first be overcome.”
The release of the report has sparked debate among professionals. Speaking about the findings, Progressive Property co-founder Mark Homer told PlaceTech that friction within transactions “creates huge cost in terms of time, lost productivity and cost in terms of increased legal, finance and professional considerations”, and digitising this process “has to be a huge benefit in increasing efficiency and reducing cost in the sector”.
Homer added: “Potentially using blockchain or other ledger based solutions could offer a route to help solve this big issues within the industry today.”
Nigel Walley, founder and MD of residential proptech company Chimni, said: “Like many reports and analysis, this one blends comments and ideas across both commercial and residential property.
“This can sometimes be helpful, and residential property has a lot to learn from commercial, but sometimes it can jar. The discussion of ‘data rooms’, online stores of key documents made available to all players in a transaction, is a case in point. They only currently exist in commercial property transactions. The industry needs to start addressing commercial and residential separately.”