2 minute read
The key to unlocking the UK’s digital housing market
By James Bawa
A lot has changed since the Victorian era. We have the internet, international flight routes and smart phones which contain almost every detail of our lives. Yet when it comes to buying a house, there’s one part of the process that would still be recognised by the Victorians.
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While most parts of the home buying and selling process have been digitalised, the settlement process still relies on the transportation of physical documents between offices; a step which causes delays, friction and confusion to many purchasing a home.
The COVID-19 pandemic has underlined the impact that this has on homebuyers and the lack of resilience in the system. The Times reported that the average transaction time from point of sale to completion increased from 12 weeks to 16-18 weeks in September 2020.
With offices closed across the country, that seemingly simple step has faced reduced capacity and operational challenges which have stopped many from progressing their home buying journey.
A simple change – digitisation – would remove these barriers and open the door to a smoother property settlement system. As the UK government aims to place the housing market at the centre of the economic recovery, it may need to look to the global market.
Australia is the first country in the world to implement a fully digitised property settlement process. Over the last decade PEXA has helped complete 8.2 million property transactions and replaced the paperbased conveyancing process with a simple online exchange platform.
This new system has benefited many. It has reduced costs for consumers, minimised the risk of errors and delays, and given consumers direct access and visibility to the progress of their home buying process.
For the conveyancing and legal industry, it has reduced the need to correct manual errors, allowing conveyancers to concentrate on higher value work and decreasing concerns around fraud.
It has reduced friction in the Australian housing market, leading to a more effective market and driving better outcomes for those looking to sell or purchase a home.
This fully digitised property settlement process has also been a key factor in allowing the Australian property market to withstand many of the challenges of the COVID-19 pandemic.
According to our Insights team, Australia’s housing market has recorded 30% year-on-year growth in property sales settlements for the first quarter of 2021 (calendar year) when compared to the beginning of 2020 (pre-COVID-19 restrictions).
For the UK market and consumers, there is recognition in the industry and amongst lenders that this evolution is needed.
With a consensus across the market that a digital solution to the UK housing sector is needed, it is crucial that industry, regulators and the government work together to unlock benefits for consumers and propel the market in to the 21st century.
We should be leaving the paperbased system in the Victorian era and opening the door to digital solutions which can reinvigorate the market as the UK recovers from the economic shock of COVID-19.
