DLT Blockchain and Real Estate

In our previous newsletter, we discussed the #tokenisation of assets which includes tangible assets such as precious #metals, and #properties. In this article, we will further discuss the real estate market and its importance in the #UK.

In the financial markets, #blockchain technologies are often associated with the use case of #cryptocurrencies. Such means of digital payment, however, only represent a small part of the universe of financial instruments that are now generally referred to as #digital assets, and which have in common that they are based on distributed ledger technology (#DLT). But one of the most appealing #features of this technology is that it opens the door to a modernisation of the way in which #financial products are issued, held and transferred as well as the way in which businesses interact with #investors.

Real estate is an important #economic asset for people in the UK, providing a considerable amount of private market activity and foreign direct #investment. The real estate market in the UK is built upon established #land rights that have been in place for a long time. The #legal and practical processes involved in real estate transactions depend heavily on the sharing of #information between parties, including details of the asset's history and associated #title searches. The use of #innovative technologies that improve information sharing can have a significant impact on real estate #transactions and the market as a whole.

New #technologies are being developed to enhance information sharing in the real estate industry, and there are various benefits of these technologies. For instance, they can reduce the #time it takes for real estate transactions to complete, leading to increased volumes and new business opportunities. They can also improve the #accuracy of shared information, which can inform price discovery and the calculation of #counterparty risk.

One such technology is #Blockchain or #Distributed Ledger Technology (DLT), which has the potential to #revolutionise real estate information sharing. In this article, we discuss an overview of DLT and its essential characteristics, also present a case study of its application by His Majesty's Land Registry (#HMLR) in the UK, and cover other potential blockchain applications in the #realestate industry.

[Read more: HM Land Registry – towards a distributed ledger of regential title deeds in the UK]

A single piece of property brings together multiple #stakeholders such as buyers, sellers, banks, lenders, real estate agents, and #government departments, all of whom depend on access to the same land #documents that they then edit, expand on, and evolve into a complete real estate #record. One single change in #data can cause a whole chain reaction of updates, not to mention unintentional #errors or confusion among the stakeholders in the current paper-based #ecosystem.

Stakeholders can trust that they are working with the most current and #validated information because of blockchain’s smart contracts and immutable records, which also eliminate the susceptibility of lost or #stolen documents or fraud.

HM Land Registry safeguards land and property ownership worth in excess of #￡4 trillion, including around ￡1 trillion in #mortgages. The land register contains more than 25 million #titles showing evidence of ownership for more than #85% of the land mass of #England and #Wales. HMLR #guarantees and protect property rights in England and Wales. It operates as an executive #agency and a trading fund and its running costs are covered by the #fees paid by the users of its services.

[Read more: How Tech Mahindra Deployed Hyperledger Fabric for the Digital Transformation of Abu Dhabi’s Land Registry]

#Real-world asset-backed tokens are a new type of #digital money that is safer and more open for #investors. These tokens are supported by real things like houses, gold, and other physical items. These tokens use #blockchain technology, which is a clear and unchangeable #record of who owns what and all the deals made. This makes it easy for #investors to follow their #investments and verify the physical existence of the asset.

As more people are getting #familiar with blockchain technology, these real-world asset-backed tokens could change how we #invest in real things. If you find this article #informative, give it a thumbs up and follow for more #content.