Last week’s news that Lloyds Bank has signed up to the Open Property Data Association (OPDA) could mark a major turning point in the digitisation of the property market. It has long been clear that the UK property market is inefficient and held back by the fragmented and archaic processes around property data and conveyancing.
The key insight behind the OPDA is that it is a lack of consistent and universally accepted data standards which is the root cause of this inefficiency. Imagine Open Banking, but for property. The Government has woken up to this, and is currently passing legislation through Parliament which will help to unlock digital solutions for the market. The Data Protection and Digital Information Bill sets out enabling legislation for Smart Data including a reusable digital identity, together with digitised and shareable Government data (including Land Registry data). And there is commitment from the Department of Levelling Up, Housing and Communities (DLUHC) for further legislation as needed to improve the homebuying process.
Until now, it has been a small group of fintech disruptors that have been leading the charge for digitising the market, including blockchain-based conveyancing software provider Coadjute, and digital payments business PEXA. However, the new legislation will clear the way for widely adopted property data standards, covering all elements of the transaction including title, land registry, property searches, valuation, energy certificates, mortgage details, identity verification and payments. This will dramatically improve the efficiency of the property market, allowing transactions to be conducted digitally and making all property transparent and easily searched, shared and transacted upon.
The benefits to the consumer, the property and lending industries and the government are obvious. Consumers will be clear winners, with housing transactions becoming cheaper, quicker, and more certain. Estate Agents should also benefit from increased transparency and improved information about properties (eg. digital home buyer / seller packs). Mortgage lenders who capitalise on the opportunities for improved customer experience should gain market share, and improve the efficiency of their processes and funding. And mortgage brokers who embrace the opportunity should also be able to advise their clients more efficiently and benefit from a faster homebuying process.
However, with a more efficient and transparent market, those who currently benefit from inefficiency in the market and proprietary data standards may find their business models challenged. While conveyancing will become much more efficient, the conveyancing businesses who are currently paid to deal with paper-based admin will find their value-added is reduced. Conveyancing should become much cheaper with most of the time-consuming admin automated.
Similarly, any firms who are using closed ecosystems, proprietary data standards or inflexible software which cannot consume the new data standards through APIs stand to lose. Data standards should be music to the ears of the tech providers, who will be able to bring the benefits to their clients, but less so if they are currently benefiting from proprietary standards. For instance Rightmove, who currently lead the market for property information with their industry default API, could lose their current competitive advantage once other consumer facing platforms can access and share digital property data from an open source.
Price comparison and property portal businesses will find it easier to present relevant mortgage offers directly to eligible customers. This will present an opportunity to lenders to develop execution-only channels suggesting a threat to the broker distribution model.
So alongside efficiency benefits will come obvious disruption to the current industry structure, with inevitable losers as well as new players and winners. All of this explains why Lloyds want to get ahead of the curve with adopting new data standards, and others will surely follow.
Phil Rance is partner at Positive Momentum