Thirdfort responds to CLC ‘Conveyancing 2030’ Discussion Paper
In January 2020, the Council for Licensed Conveyancers (CLC) released a Discussion Paper examining the longer term trends in conveyancing and outlining six predictions for how the industry might look in 2030.
We consider three of these 'futures' a little further.
1. Conveyancing will be a fully electronic process by 2030.
The paper posits that a UK PEXA (Australia’s e-conveyancing platform) is a ‘racing certainty’ rather than ‘hypothetical’. PEXA provides an online secure ‘workspace’ for all parties to a transaction to communicate and exchange documents. For conveyancers, this means they can liaise with other stakeholders, conduct title searches, lodge documents, transfer funds and register the transaction all via one platform. While this sounds like a UK conveyancing utopia, is this as much of a ‘certainty’ as the Paper suggests? And is it conceivable that this could happen by 2030?
It certainly is conceivable. And with the increase in tools already automating parts of the conveyancing process, entirely possible. But by 2030? It remains to be seen. Current solutions focus on fixing individual parts of the conveyancing process, be that drafting documents, e-signing, identity verification or transferring funds on completion. This has led to a multitude of solutions which, while making the conveyancing process more streamlined and client friendly, aren’t fixing the root problem - an antiquated transaction system, held together by many parties with conflicting interests (often with the incentive to add opacity) and built on a Land Registry that is yet to undergo its digital revolution.
PEXA worked because it succeeded in getting different professionals (traditionally with differing interests) onto the same platform with the client. It helped that PEXA was heavily backed during the early days by Australia’s equivalent of HM Land Registry- a database without the 400+ years of title deed information to digitalise that we have in the UK. A slick client interface was also key in getting the consumer onto their platform.
So what does this mean for the UK? Whilst the Land Registry has made a promising start in digitalisation with Digital Street, there is still some way to go. Without the state intervention that had a hand in PEXA, it will be for the UK industry to come up with a solution that works and transparently joins up multiple parties across the transaction.
2. Money and financial information will move around quickly and securely.
The Paper predicts that the increase in financial products aimed at making safe the way money is exchanged in property transactions will continue, spurred by the ongoing fight against rising levels of property fraud. These solutions, including Third Party Managed Accounts (TPMAs) - a single central client account - and Open Banking - government backed technology which provides a secure way to give regulated providers access to individuals’ financial information - aim to make consumers’ data safer, payments more secure and keep out bad actors using laundered funds.
Despite suffering a slow start, Open Banking is now gaining traction with 8 million UK sign ups in 2018- this is predicted to rise to over 33 million by 2022. While Open Banking has had the biggest uptake in FinTech, with the likes of ‘buy now, pay later’ company Klarna and budgeting app Emma, property and conveyancing is yet to follow suit. However, the potential for Open Banking to assist with the home buying and selling process is huge. From automating the retrieval of digital bank statements for AML checks, to reliably matching consumers to mortgage products best suited to their needs, Open Banking alone could streamline the home buying process by weeks.
Yet, as with any new technology, uptake will be dependent on firms’ willingness to trust Open Banking solutions. Other factors include firms being prepared to change their organisational setup to accommodate solutions like TPMAs and, of course, clients’ willingness to use it. With change originating in apps like Thirdfort, that incorporate Open Banking into AML checks, it is very likely that in 2030 the exchange of money and financial information in property transactions will be much more streamlined.
3. It’s all about the data.
The paper calls for ‘property logbooks’ - a living resource which stores and makes accessible property information that can be downloaded and updated with each transaction the property goes through. Going beyond HIPS (Home Information Packs which are designed to only support the sales process), a logbook stays with the property for life and could even be connected directly to the property for real time updates through the Internet of Things - essentially creating a property ‘digital twin’.
This would reduce waiting times for information, provide buyers and lenders with accurate, up-to-date information and relieve conveyancers of much of the due diligence admin. Beyond this, it would provide buyers with upfront information on the property before they engage surveyors, lenders or even conveyancers, leaving no nasty surprises to be found later down the line and reducing the number of fall-throughs. This seems reasonable. After all, it is rare you would buy a car without receiving an MOT certificate and taking it for a test drive. Why wouldn’t you have the same approach to the biggest purchase of your life?
But are logbooks likely? And who would take responsibility for them? As with any new technology where data is stored in the cloud, the first challenge will be getting conveyancers and their clients comfortable with the security aspects. There will also need to be fraud combatting measures in place to ensure that the owner of the logbook and property match. This is achievable through robust identity checks, combined with Land Registry data on ownership. Further, the data must be validated to ensure it is reliable, accurate and trustworthy. An independent third party would need to assume this role, most likely with regulators and licensors involved. However, perhaps the biggest challenge could be from consumers. When people in the UK buy on average four properties in their lifetime, the benefits a ‘digital property twin’ provides are reaped on purchase, but there is little incentive for homeowners to want to continually share their property data for the benefit of a future purchaser. In a housing system where trust is already on a knife edge, any implementation of logbooks will need to consider the cost-reward analysis closely.
To discuss any of the points raised further, you can email us at firstname.lastname@example.org.