Governments around the world are beginning to register land deeds on distributed ledgers. Since the rise of cryptocurrencies, the blockchain has been hailed as a generation-defining technology that’s set to transform everything from finance to retail. But is it enough to resolve some of the longest standing problems in conveyancing?
Last May, the UK government announced that HM Land Registry would undertake a wide-ranging digitization effort. The initiative, named ‘Digital Street’, is set to explore whether blockchain technology can help the department become “the world’s leading land registry for speed, simplicity and an open approach to data”.
Already, government trials of blockchain technology land registries are underway in places as diverse as Brazil, Russia, Dubai, Ghana and Sweden. Distributed ledgers are nearly 10 years old now, and governments are still grappling with what they can be used for. Proponents say the technology will revolutionise how land deeds are and will create a new age of transparency and accountability in property markets. In reality, the results have been less than promising so far.
In Sao Paulo, where the need for property rights is particularly urgent, the Institute of Property Registry in Brazil demonstrated how easily flawed the pilot programmes have been by listing fraudulent properties on the blockchain. If governments are serious about innovating conveyancing, they need to focus their efforts on facilitating something most of us in the developed world take for granted: property rights.
Across the developing world, emerging economies are fighting to unlock the value of private property. In India alone, more than 100 million people live in informal settlements with no legal claim to their property, according to the UN. Even though most places have a legal basis for property rights, much of the world still accurate maps or sufficient infrastructure to enforce these rights. A person may have built their home and everybody in the neighbourhood might understand that it’s theirs, but without legal recognition, their property is dead capital — it can’t easily be bought, sold, valued or considered as an investment.
According to The World Bank, only 30 percent of the world’s population have a legally registered title to their name. Countries with simpler, quicker property registries benefit from less corruption and grey-market activity, and better access to credit and private investment. This is the case even after controlling for income and growth. The economic potential of enforceable property rights is clearly enormous.
Omidyar Network is an impact investment firm that operates globally to improve the opportunities available to disadvantaged peoples. It’s the whole teach a man to fish but backed by some of the sharpest investors and philanthropic thinkers anywhere. Peter Rabley, property rights lead and venture partner at Omidyar Network, believes that ensuring access to property rights is crucial for global development.
He says: “It’s true that people need to be able to own their homes to secure a loan, but the issue is much bigger than that. Many people around the world are still living in subsistence farming communities, which is really hard work and not a great way to live. Ideally, what they’d like to be able to do is to lease their property to other farmers. Then they can move to the cities, while others can then start operating farms at scales that are economically viable.”
The Institute for Liberty and Democracy, a think tank founded by the economist Hernando de Soto, estimates that two-thirds of the world’s population lack access to a formal system of property rights at present, resulting in undeveloped resources and assets worth as much as $170 trillion. With 20 percent of the world’s urban population living in informal settlements, and an additional three million people moving into crowded cities every week, granting these people legal ownership of their homes could transform the global economy. The question is how we go about doing it.
“The problem isn’t that the technology isn’t there — we already have a whole lot of enterprise solutions and database technologies to store the records. What we need is to accurately map the areas where people are living. In India, they used geospatial technology to uncover 500,000 inhabitants of a slum that previously nobody knew about. Once we’ve been able to identify where people are living that’s the first step to ensuring that they have property rights,” Rabley explains.
Distributed ledgers are a powerful tool for storing data in a transparent and distributed way, but unless they can be used easily by the people who need them most, their utility will always be limited. Technology has a crucial role to play in granting property rights, but it can’t solve the problem in isolation because it’s not a technical problem.
The reality is that existing ledger systems are already sufficient to record the information and make it accessible. The challenge now is to build the infrastructure and institutions that are capable of mapping the ever-growing expanse of informal communities.
About Dominic Wilson:
Dominic is co-founder and managing partner at Pi Labs. He leads the firm in a general capacity with a specific focus on investments and investors. He also sits on the boards of Brolly, FalconDHQ and Office App. Dominic has a wide background in Private Equity Real Estate worked with both AEW Europe and Savills Investment Management and transacted over €3bn of deals across Europe. Dominic has a degree in Law with French from the University of Birmingham and an MBA from the London Business School.
About Pi Labs:
Pi Labs is Europe’s first VC firm to focus exclusively on investments. It has established itself as a pre-eminent global leader in the early stage domain. To date, it has made 28 investments including , Brolly, Land Insight and Plentific. Pi Labs is global in its focus – it has backed founders from 17 different nationalities and regularly receives investment proposals from over 50 countries worldwide. Pi Labs has become the centre of the property innovation ecosystem with a deep track record in real estate, technology and investment .