BSA blog

BSA blog

News and views on topical issues from BSA staff and guests.

Sign up to receive blogs

By subscribing you consent to us sending you blogs


Could a 20-minute house purchase ever become a reality?

A recent report from management consultancy Oliver Wyman on modular financial services included a two-page comic book depicting what buying a house in the future might look like.  
The comic depicts a woman walking into an estate agency looking for a one-bedroom flat. A property fitting her criteria is available and she views it through a virtual reality (VR) headset. She agrees to buy it and immediately gets a breakdown of her financial situation. The property and legal documents are immediately uploaded online, a mortgage is sourced based on the buyer’s criteria in addition to life and buildings insurance. All of the financial options are acceptable and she completes the deal by a finger print signature which is uploaded via her smart watch. All of this takes her just 20 minutes.
Could this be possible? VR headsets are already available for under £50. Online mortgage details and credit scores are available. Fingerprint readers on smart phones and smart watches already exist.  It’s the combination that remains the stuff of science-fiction, as is the speedy transaction time of less than half an hour. The average house purchase time often touted today is currently between 8 and 12 weeks.
However, a recent report from HSBC, which included data from Rightmove, on the average time it takes for buyers to find the right property, estimated that UK property buyers could be facing an average transaction time of 27 weeks.
Improving the overall house buying process, as well as the volume of homes built, is something that the Government is looking to take up.
In the March 2016 Budget, the Government revealed that the Department for Business, Innovation and Skills (BIS) will be publishing a call for evidence on how to make the process of buying a home “better value for money and more consumer-friendly”. It’s rallying cry for this step is currently unpublished BIS research backing up the figure in the Budget, that consumers spend £270m each year on failed housing transactions. Irrespective of what this research is based on, there is no doubt that the current process could be improved.  
In England and Wales (but not Scotland), even before you get to the myriad stages that make up a successful transaction, vendors (and buyers) pulling out at the last minute are issues that have to be contended with. In housing chains where a successful sale and purchase is necessary for three or four properties, all it takes is for one deal to fail for the whole chain to uncouple.
Then there’s the fact that buyers have to provide both the lender and conveyancer with identical information to prove identity, deposit and ultimate affordability. Of course countering fraud and meeting anti-money laundering rules are crucial, but there are new technologies out there that could provide a solution.
For example, block chains, the underlying technology for the digital currency Bitcoins, could be one way to improve the duplication of resources, providing encrypted streams of information that all parties involved in a transaction could tap into.
It will be interesting to see what suggestions are generated by the Government’s upcoming call for evidence. But regrettably I think I’m on relatively safe ground in saying that 12-27 weeks will be nearer the reality than 20 minutes for most home buyers for a long, long time to come.

Posted by Robert Thickett on 29 April 2016