In March, the Conservative government announced its intention to sell off the Land Registry, triggering a massive wave of protests. A petition against the move gathered more than 300,000 signatures, while 65 MPs signed a letter calling on the government to abandon the controversial plans.
Selling the registry would put £1bn in the pockets of the Treasury. But the long-term benefits for the public are disputed. The Competition & Markets Authority has said that the sell “would harm consumers,” while the Open Data Institute warned that a private Land Registry would be vulnerable to fraud and manipulation.
Think-tanks, like Centre for London, and technology companies, such as DealX, suggest that instead of privatising the registry, we should follow the example of Sweden, where the government has been testing a system of blockchain smart contracts for the country’s land registry. Such a system should ensure cheap and efficient service for end-users, while safeguarding the public interest, transparency, impartiality and accountability.
Incorporating blockchain technology in land registries is not new. The Republic of Georgia and Honduras have been conducting such experiments in recent years, while Sweden is the first advanced western country to take steps in this direction.
So far, the UK government has not fully explored the potential of such cutting-edge innovation. If Sweden’s efforts prove successful, they “will act as a roadmap for others to follow,” explains Joseph Kelly, CEO of DealX, a real estate data platform.
Here’s how it works. The blockchain removes the need for a trusted third party to verify a transaction (e.g a notary). By being a database that contains the history of any transaction made, it provides proof of who owns what at any given moment.
This distributed ledger is replicated on thousands of computers around the world and is publicly available. In the Swedish case, the blockchain verifies the correctness of Land Registry documents and the rules and order of authorisation with a technology for storing digital fingerprints. The fingerprints are unique for every document, register and process step; and so are as effective a means of verification as a human fingerprint.
The benefits for the Land Registry would be manifold:
Reduced costs: A blockchain would provide a way of combining many processes and systems into one. This would “increase efficiency through distributed processing, and thus reduce costs,” Tim Scott, technology director at the not-for-profit business advocacy group London First, told me.
And, DealX’s Kelly adds, the costs involved in developing a trial blockchain based system are “tiny”, compared to the underlying savings that could be made.
Efficiency: By having a blockchain-powered registry, it would be possible to conduct real-time audits and speed up settlements. It will reduce the friction in registration, too, because people could do this using their smart phones in the future, just like a notary service such as Saville & Co. or H&S.
Transparency: The Times recently revealed that – rather embarrassingly – all the prospective buyers of the Land Registry are linked with offshore firms. Registering information on blockchain’s peer-to-peer distributed ledger system would mean that such information is publicly available.
Long term investment: Privatising the Land Registry has lasting implications. Open Data Institute Deputy Director Jeni Tennison has warned of the long-term value of data as infrastructure for the economy, comparing it to a country’s road and bridges. “It means thinking carefully about ownership, access and control,” she told the Financial Times.
Even if the government proceeds with the privatisation, incorporating a distributed ledger solution in the registry would provide some safeguards. Henrik Hjelte is chief executive of ChromaWay, the startup taking part in the Swedish initiative. He explains that, with blockchain, responsibilities can be split by allowing different parties to specialise in different parts of a complex set-up. “If I could give some advice,” says Hjelte, “I’d get help to look more closely on what a solution built on blockchain could do before making a decision to privatise.”
Yet, investing in blockchain would be made harder by privatising the registry. “Passing on lower costs to service users may not be that attractive to the new owner,” explains Joseph Kelly. Under public ownership, the Registry can take a strategic view on integrating the new technologies, which are necessary to compete in a digital world.
Sweden’s endeavours will help place the country at the forefront of this new technology, argues Tim Scott at London First. “This is exactly the sort of forward-thinking policy London and the UK should also be pioneering.”
In a report released earlier this year, Sir Mark Walport, the government’s chief scientific adviser, suggested that the British authorities should begin trials of distributed ledger technology, and made a series of recommendations which could help the UK become a global leader in this field.
“We now wait with bated breath to see if the long-overdue Digital Strategy will take up these recommendations,” says Scott. He hopes that Sadiq Khan’s initiative to appoint a Chief Digital Officer for London – as proposed in a report he helped author – will play a significant role in ensuring London is an international leader in this technology.
The introduction of blockchain could help the public sector decentralise services in a way that protects people’s identity and delivers more efficient service. When an exchange is made, it would be possible to know that a certain land asset had certifiably transferred. “Because this would be a public ledger, there is no need for a third party, such as expensive legal counsel, to validate the transaction was above board – thus saving legal fees,” Scott explains.
As with any disruptive technology, there will be significant questions to address around governance, security, privacy and trust. Dr Andres Guadamuz, senior lecturer in intellectual property law at the University of Sussex, tells me that “there is considerable risk in using open development environments such as Ethereum, a public blockchain platform,” as a recent hack indicates.
With these risks addressed, however, an open source structure for the Land Registry could have long-term benefits for both community and economy. It certainly beats privatisation and short-term profit.This article is from the CityMetric archive: some formatting and images may not be present.