Forget privatisation: the Land Registry needs blockchain

Not gonna lie: we struggled to illustrate this one. Image: Getty.

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.

The Land Registry holds more than 24m titles, and covers 86 per cent of the land of England and Wales. It employs 4,578 staff in 14 offices; its work generates a financial surplus for the government.

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.


Is Britain’s housing crisis a myth?

Council housing in Lambeth, south London. Image: Getty.

I’ve been banging on about the need for Britain to build more houses for so long that I can no longer remember how or when it started. But at some point over the last few years, the need to build more homes has become My Thing. People ask me to speak at housing events, or @ me into arguments they’re having on Twitter on a Sunday morning in the hope I’ll help them out. You can even buy a me-inspired “Build More Bloody Houses” t-shirt.

It’s thus with trepidation about the damage I’m about to do to my #personal #brand that I ask:

Does Britain actually have enough houses? Is it possible I’ve been wrong all this time?

This question has been niggling away at me for some time. As far back as 2015, certain right-wing economists were publishing blogs claiming that the housing crisis was actually a myth. Generally the people who wrote those have taken similarly reality-resistant positions on all sorts of other things, so I wasn’t too worried.

But then, similar arguments started to appear from more credible sources. And today, the Financial Times published an excellent essay on the subject under the headline: “Hammond’s housebuilding budget fix will not repair market”.

All these articles draw on the data to make similar arguments: that the number of new homes built has consistently been larger than the number of new households; that focusing on new home numbers alone is misleading, and we should look at net supply; and that the real villain of the piece is the financialisation of housing, in which the old and rich have poured capital into housing for investment reasons, thus bidding up prices.

In other words, the data seems to suggest we don’t need to build vast numbers of houses at all. Have I been living a lie?

Well, the people who’ve been making this argument are by and large very clever economists trawling through the data, whereas I, by contrast, am a jumped-up internet troll with a blog. And I’m not dismissing the argument that the housing crisis is not entirely about supply of homes, but also about supply of money: it feels pretty clear to me that financialisation is a big factor in getting us into this mess.

Nonetheless, for three reasons, I stand by my belief that there is housing crisis, that it is in large part one of supply, and consequently that building more houses is still a big part of the solution.

Firstly I’m not sold on some of the data – or rather, on the interpretation of it. “There is no housing crisis!” takes tend to go big on household formation figures, and the fact they’ve consistently run behind dwelling numbers. Well, they would, wouldn’t they? By definition you can’t form a household if you don’t have a house.

So “a household” is not a useful measure. It doesn’t tell you if everyone can afford their own space, or whether they are being forced to bunk up with friends or family. In the latter situation, there is still a housing crisis, whatever the household formation figures say. And there is plenty of anecdotal evidence to suggest that’s the one we’re living in.

In the same way I’m not quite convinced that average rents is a useful number. Sure, it’s reassuring – and surprising – to know they have grown slower than general prices (although not in London). But all that figure tells you is the price being paid: it doesn’t tell you what is being purchased for that payment. A world in which renters each have their own property may have higher rents than one in which everyone gets one room in an over-crowded shared flat. It’s still the latter which better fits the label “housing crisis”.

Secondly, I’m entirely prepared to believe we’ve been building enough homes in this country to meet housing demand in the aggregate: there are parts of the country where housing is still strikingly affordable.

But that’s no use, because we don’t live in an aggregate UK: we live and work in specific places. Housing demand from one city can be met by building in another, because commuting is a thing – but that’s not always great for quality of life, and more to the point there are limits on how far we can realistically take it. It’s little comfort that Barnsley is building more than enough homes, when the shortage is most acute in Oxford.

So: perhaps there is no national housing crisis. That doesn’t mean there is not a housing crisis, in the sense that large numbers of people cannot access affordable housing in a place convenient for their place of work. National targets are not always helpful.

Thirdly, at risk of going all “anecdote trumps data”, the argument that there is no housing crisis – that, even if young people are priced out of buying by low interest rates, we have enough homes, and rents are reasonable – just doesn’t seem to fit with the lived experience reported by basically every millennial I’ve ever met. Witness the gentrification of previously unfashionable areas, or the gradual takeover of council estates by private renters in their 20s. 

A growing share of the population aren’t just whining about being priced out of ownership: they actively feel that housing costs are crushing them. Perhaps that’s because rents have risen relative to wages; perhaps it’s because there’s something that the data isn’t capturing. But either way, that, to me, sounds like a housing crisis.

To come back to our original question – will building more houses make this better?

Well, it depends where. National targets met by building vast numbers of homes in cities that don’t need them probably won’t make a dent in the places where the crisis is felt. But I still struggle to see how building more homes in, say, Oxford wouldn’t improve the lot of those at the sharp end there: either bringing rents down, or meaning you get more for your money.

There is a housing crisis. It is not a myth. Building more houses may not be sufficient to solve it – but that doesn’t meant it isn’t necessary.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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