Modern technology has simplified many aspects of our lives, both personally and commercially. It has been possible to shop or take out contracts and arrange finance electronically for some years now. However, the conveyancing industry has been slow to adapt to, or to adopt, the new technologies available.
Much of the house-buying process is still conducted manually, with the process usually taking at least two months to complete. While there are companies that do carry out conveyancing online, the paperwork still requires a wet signature, which slows the process as well as carrying a risk of paperwork being lost in the post.
The Land Registry, however, is looking to change this through the implementation of new, digitised systems. In recent years, it has implemented innovations such as digitising the Property Register, which allows solicitors to access and download a copy of a registered title directly, thus reducing some of the processing time. Now, however, it is looking to digitise the full process of conveyancing.
In February 2017, the Land Registry released a consultation paper containing a number of proposals aimed at speeding up the conveyancing process. This paper followed a small-scale test of a system known as the Digital Mortgage project, which was operated in conjunction with the conveyancing company Enact and the Coventry Building Society. Those customers who tested the system, which was a mock-up of the suggested format, were overwhelmingly positive about the experience.
The consultation paper contains a number of proposals aimed to simplify the conveyancing process. One of the main proposals is to allow vendors and purchasers to digitally sign the legal documentation. This could be done securely through utilisation of the existing government system https://www.gov.uk/government/publications/introducing-govuk-verify/int… which allows people to verify their identification electronically.
The consultation paper also acknowledges the changes in modern life and working practices. It suggests changing the definition of a working day to take this into account and improving the service provided to clients. In addition, a review of the retention of documentation and where it needs to be lodged, plus physical access to the manual Land Registry records, is included. Physical access to the records incurs a significant cost due to the need of retaining personnel to staff the offices. It is also a requirement that before access, the identity of those applying must be verified at no cost to the applicant. The current level of usage does not justify the staffing costs. A digital system would allow access to the records without the need for manual verification of the accessor, or having an employee present.
How it would work?
The process will begin with the conveyancer creating an e-mortgage. This would be achieved through the conveyancer accessing the Land Registry’s systems and entering a reference along with the borrower’s personal details. This creates the deed. Once this is completed, the borrower’s contact information is provided and they receive a link to the e-mortgage deed. That link will enable the borrower to digitally sign and validate the deed.
Obstacles to the introduction
For digital conveyancing to work, every organisation involved in the transaction must use compatible systems. Organisations involved in property transactions typically include solicitors, mortgage providers, estate agencies, surveyors, local councils and other governmental organisations, as well as the vendors and purchasers.
Persuading all these parties to adopt the technology could be difficult. While some organisations may simply be unwilling to invest in the appropriate systems, public bodies may not have the governmental funding to make the necessary changes. This could prove to be the main stumbling block for the proposals.
The Land Registry’s consultation will last until 5 April 2017, and a report will be published by the end of June 2017. The report will then be presented to Parliament for debate.
If digital conveyancing is adopted, it is anticipated that, within a short time, homeowners mortgaging or re-mortgaging their property without a change in ownership would be able to complete the whole transaction online from mortgage offer through to signature. It is hoped that it will then be extended to corporate borrowers and electronic transfers. Should there be enough interest, the Land Registry will look at expanding the use of the technology for leases too.
The Land Registry’s proposals mark a significant change in the processes of conveyancing. They would dramatically simplify and speed up the process, making buying and selling property so much simpler. While investment in the appropriate technology may be a stumbling block, the benefits of adopting the Registry’s proposals are clear.