Proptech: how will we buy our homes in the future?

On the face of it, the traditional way of buying and selling property is ripe for disruption.

Picture: PA

It is a system which no consumer seems to enjoy, in fact moving house is often cited amongst the most stressful events in life, up there with bereavement or divorce.

It is also a drawn-out process, with identity checks, land and title searches, credit reviews, conveyancing and finance arrangements taking months rather than days to arrange and verify. Offers for property are sometimes still delivered by fax, a technology that has been outdated in other industries for at least a generation.

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It can be expensive, with traditional agents charging the vendor a percentage of the sale price that can run into tens of thousands. Nor does the model mean that agents are always motivated to get the best price or best execution, when a fast sale is their prime object.

Picture: TSPL

The Edinburgh fintech powerhouse oiling the nation’s financial transactions ( sponsored )With a great deal of money to be saved it means potentially there is a lot of profit to be made by tech platforms which can successfully make the process more efficient.

A new generation of proptech entrepreneurs is transforming the multi-billion pound industry by seeking to change how we buy, sell and rent.

Parts of the house buying process have already been affected dramatically by the emergence of the internet.

New challengers

Rightmove which launched in 2000 and Zoopla which followed in 2008 list properties online in partnership with established estate agents.

New challengers such as Purplebricks have built up around a 7 per cent market share by doing business on a fixed-fee basis, rather than taking a percentage from a sale, facilitating both viewings and offers online.

But one way in which proptech companies are offering a different path is by using data that is already in existence, but in a more cohesive way.

Kent Mackenzie, partner and fintech lead, Deloitte: "We are not terribly far away from connecting up that entire home-buying journey. From the point at which you appear to be interested in moving house, you leave a data footprint.

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He says each online interaction will have its own Application Programming Interface (API) and allowing software applications to communicate with one another at every stage - joining them up - would make the whole process smoother.

"There are APIs all through that journey, all along that value chain, and it’s technically possible to take you all through. It just needs someone to sit above the whole process and look at how they might bring a joined-up service to market.”

Chris Brown, senior consultant, Deloitte agrees: "It’s not all fintech - it’s much broader.

“There is a real market for a consumer perspective along that whole journey, a need to make it much more efficient.”

Edinburgh-based companies The Property Angel are one company looking at the whole process of buying and selling property.

“We started by creating the world’s first ‘coming soon’ marketplace which allows house sellers to test the market for free, online, without getting a home report or engaging an estate agent, to see if you can engage buyer interest.”

From this, the company has added services, both using technology tried and tested in other industries such as a consumer review system, and developing its own.

Davidson says: “We added a reachability tool, which allows potential buyers to create a triangle on a map, for instance with points where both partners work and where kids are dropped off or family members live, to pinpoint a target area.

“We refer them to trusted property partners, such as solicitors, estate agents, mortgage advisors, tradespeople, at the right time. All partners are reviewed by users and if they fall below a certain rating they are removed from the platform. We aren’t building technology for agents, our hybrid platform is all with the consumer at its heart.”

The site is free to use with the income coming from business referrals

University of Edinburgh course to feed fintech skills pipeline ( sponsored )Davidson says as a young company they will continue to innovate as a response to consumer feedback. “We have a roadmap of another ten or so features designed to make us into a one-stop shop.”

Proptech companies are also targeting conveyancing which is seen as outdated and a major point of stress for consumers.

Streamlining the process can involve blockchain, the innovation behind cryptocurrency, which for instance could be used to create distributed ledger technology or a series of smart contracts, which are secure and binding, online.

Kent Mackenzie says: “The financial services elements could almost become invisible - it would be a lifestyle journey rather than a predominantly financial one."

Affordability passport

Castlight, based in Finnieston in Glasgow, are working in collaboration with Deloitte to streamline the mortgage application process. Its product, the Affordability Passport, promises a faster, clearer and fairer assessment of a mortgage applicant’s financial situation.

It is compiled using temporary secure access to the applicant’s bank account, and includes an address verification and anti-money laundering checks.

‘Fintech figureheads’ key to attracting talent to Scotland ( sponsored )Once compiled, financial retailers can use the passport to significantly reduce the processing time of offering loans. The information is shared with the applicant, who will better understand their own finances and could use the report to make changes in the case of being turned down for a loan.

Rather than ‘computer says no’ it is something of a return to the days when your local bank manager made a mortgage decision based on full detailed knowledge of your income, and your spending habits.

Equally, online estate agents such as Settled are helping sellers compile all the relevant information about their homes, such as home reports, titles and land searches to present their property to the market as ‘buyer ready’, to speed up the process and prevent sales falling through.

Gigly, the platform serving workers in the gig economy, is one company targeting mortgage seekers in a growing market.

By analysing customers’ data, Gigly can match them with financial advisors who are specialists in working with those who may not be able to provide standard payslips or unbroken records of employment.

In the UK, there are currently around two million freelancers, up 43 per cent since 2008 with numbers predicted to carry on growing, but established credit checks and mortgage processes are likely to shut them out of home owning.

In this digital age the traditional industries of real estate and law will have to continue to innovate to address the needs of the bricks and mortar market.