Blockchain and the Digitalization of Real Estate | Australian Company with 11 Million Transactions

City A.M. | Jonny Fry  | Dec 19, 2022

Blockchain technology has already been successfully used for a number of years in Australia by a company called PEXA, which has recorded over 11million property transactions with enhanced protections, transparency of ownership process, and real-time settlement for a more efficient process for everyone involved.

• Proof of ownership: Ordinarily, the buying and selling of real estate is recorded on a central register known as the Land Registry, but the World Bank estimates that “70 per cent of the world’s population still lacks access to proper land titling…”
  • So-called sophisticated jurisdictions such as the UK, 15% of property is not recorded on the Land Registry. For example, if someone has owned a property before 1990 and not taken out a mortgage since, the property may not be registered.

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• Payment options: Traditional banks, lenders, lawyers, escrow agents, etc, are increasingly facing a choice as to how money is transferred from both lender to borrower and from the buyer to the seller of a property. The use of digital assets means that it is now cheaper to transfer money between different parties, and the amount of money to be saved using a digital currency pegged to the $ or € or £ etc could be quite considerable.
• Reducing fees: Very few real estate transactions involve transferring money directly from buyer to seller as the monies customarily go via the buyers’ and sellers’ respective lawyers.
  • UK: Once the seller’s lawyers have deducted their fees the residual capital is transferred to the seller. i.e., at least three transactions/messages are generated: £25*3= £75 for the sale of one home in SWIFT messaging fees alone. This equates to £75million p.a. just for UK mortgages.
  • US:  the cost to deposit and receive money (wire transfer fees) is typically $15 to receive and $25 to send. Given that last year there were 6million property transactions, the cost to move money from the buyer to seller equates to approximately $240million.
    • A large proportion of these real estate money transfer fees in the US and in the UK could actually be eradicated using a CBDC or a stablecoin – i.e., a digital currency pegged to a fiat currency.

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• Digitalization: In 2011, the Australians introduced legislation called the Electronic Conveyancing National Law Agreement  enabling registered “subscribers” (lawyers, conveyancers and lenders) to use the system on behalf of buyers and sellers of real estate, so avoiding delays in requesting additional authorisation and signatures.
  • Using blockchain technology, one secure data base that relevant parties can have access to has, in effect, been created and it has been so successful that, according to Legal Futures, “80% of conveyancing completions in Australia” are now run via the PEXA platform
  • Faster: The property exchange has, itself, handled over 11million real estate transactions in Australia to date, reporting that “in Australia, re-mortgaging times have dropped from an average of 42 to 15 days, with some re-mortgages even completing in one day.”

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