How does a digital future come to life in the mortgage sector?

By Maria Harris, Chair of the Open Property Data Association

 

One of the biggest problems facing the property and mortgage sector is that it’s still a largely analogue process in an increasingly digital world. The industry currently lacks a data-driven process enabled by digital technology, which would unlock the solutions we desperately need across the sector.

Instead, we still rely heavily on paper-based documentation and manual information processing. Consequently, the home-buying process ends up being back-to-front, to the frustration of everyone involved.

What I mean by this is that the most crucial information needed by the buyer to make an informed decision about their prospective new home – the content of titles, deeds, searches, restrictions, planning permissions, building safety issues, etc. – doesn’t become available to them until close to the end of the transaction. At this point, they are already heavily emotionally and financially invested.

This is what often derails the process, as buyers don’t find out until late into the conveyancing stage things that compel them to withdraw from the transaction. The only way to fix this huge problem is to give buyers and sellers greater control over and a better understanding of their data so that all the key information is available upfront.

So many other industries have the right data available in the right format from the outset. This means that the primary data is already digitised, and the necessary trust framework is in place to enable this data to be collected, shared, trusted, proven and provenanced in real-time. We’ve never had anything like this in the property or mortgage industries.

However, that may all be about to change: it seems that we are now poised on the cusp of a digital revolution in our sector, courtesy of a key proposal announced in the recent King’s Speech and developed by the Digital Property Market Steering Group, a consortium of key industry partners in the land and property market.

This truly innovative initiative will establish secure digital verification services so that digital identity data, smart data and government data can all be collected once with confidence and then shared across the entire transaction in a digitally secure and trusted way.

What this means, in effect, is that the data needed for the delivery of services to individuals by the Government – including Land Registry data, title searches and all the other information relevant to property purchases mentioned above – is going to be digitised and made shareable via a trust framework enshrined in legislation. This will be a complete game-changer that will bring about the biggest transformation ever witnessed in the property industry.

To facilitate this sea change for the sector, the Open Property Data Association – which I chair – is working on creating the necessary open property data and technology standards. To this end, we are also collaborating with the relevant government departments to determine which data to prioritise, as digitising the information is a very involved task.

The highest-priority data is in deeds and searches, as obtaining this information can currently make the property-buying process agonisingly slow. The information is also what most commonly derails the transaction right at the end of the process when the buyer finds out things about their potential new home that they cannot reconcile.

So, what will this all look like in practice for the mortgage adviser of the near future? The fundamental change is that when a customer approaches them after finding a property, advisers will have a fully digital property pack at their disposal, with all the key information at their fingertips. This means there are no nasty surprises towards the end of the transaction journey, and the adviser can provide a much more personalised approach.

By that, I mean that advisers will be able to have fruitful conversations with their customers about whether the respective property is right for them based on the information available, what they want to do with their future and their aspirations. And then, the adviser will be able to source a lender based on trusted, reliable data so that nothing comes along to throw a spanner in the works once the application is submitted.

Advisers need to be aware of these pending changes and prepare accordingly. National Trading Standards (NTS) is the body mandating what data needs to be available for property listings in future. Still, much of the awareness-raising campaign around this has been aimed mainly at estate agents and property portals. This means that the impact of these changes on intermediaries and mortgage lenders has yet to trickle through, and they will have to play catch-up if they don’t get on top of this soon.

So, it’s vital that advisers inform themselves accordingly once NTS publishes its regulations later this year; that they know what customers’ expectations are going to be; and that they work with their software partners to prepare for this revolutionary flow and exchange of open property data – because the property and mortgage industry is about to change forever.