The case for digitising residential property

This article exams the arguments, use cases and initiatives involved in demonstrating the benefits of digitalisation for residential property in the UK.

Despite recent advances across the sector, data on large parts of the built environment does not exist in a digital format. In the UK, having this data would support the development of use cases. It would also provide value to property owners and to central and local government. While the benefits of digitisation can be realised across all property types, this article focuses on the UK residential property. However, many, if not all the themes discussed below, will have relevance to other countries.

Why digitalise?

As of January 2022, the value of UK residential housing stock was estimated at over £8 trillion by Savills and the number of UK households was put at some 28.1m by the Office for National Statistics. Aside from the substantial monetary value of UK housing; societal, environmental, and health and safety benefits are essential considerations when assessing the opportunity to manage these properties using digital data sets.

There are a variety of terms that risk confusion when thinking about digitalising residential property. These include Property Logbook, Property Passport, Property Pack, Building Passport, Property MOT, Building Retrofit Passport, and Digital Twin. What these terms have in common is they imply a digital data set that seeks to capture the most important characteristics of a property. Capturing these characteristics allows multiple stakeholders to perform a variety of due diligence tasks.

Digital conveyancing: The Home Buying and Selling Group

In England and Wales particularly, the process of buying and selling property is slow. Data bottlenecks are often a contributing factor. As a result, property transactions are vulnerable to failure at many points along the chain of prospective buyers and sellers.

A wide range of data is required to support due diligence in property sales. That data needs to be assembled from a wide range of sources from the public and private sector. It also needs to satisfy a range of stakeholders, including buyers, conveyancers, lenders, HM Land Registry, HM Treasury and other interested parties.
There is certainly value in digitising data sets and in making these data sets available as ‘upfront’ information at the point properties are marketed for sale by agents.

The Home Buying & Selling Group is an informal grouping of participants across the property, legal, and finance sectors, working to improve the home buying and selling process for the consumer. Its Tech Subgroup is developing a proof of concept for an open application programming interface (API). This API will allow data based on the Buying and Selling Property Information (BASPI) data set to be exchanged between market participants across the whole buying, selling, and conveyancing process. The BASPI data set has been mapped to the RICS Data Standard (RDS).

Property lettings: the Lettings Industry Council

Recent estimates put the value of the UK rental sector at almost £1.7 trillion across some 8.7m privately rented homes – over a fifth of the entire property market by both value and number of households.

Working to raise standards across the private rented sector, The Lettings Industry Council (TLIC) comprises lettings experts from across the industry, professional bodies, and schemes, working to raise standards across the private rented sector. One stream of its work is to promote the concept of a standard for a digital property MOT for rental properties. In a similar way to the conveyancing process, a trusted digital data set will allow targeted and cost-effective enforcement of legislation. In would also provide increased protection for tenants and a reduction in rogue landlords.

Retrofits: The Coalition for the Energy Efficiency of Building

The UK housing stock is responsible for approximately 20% of the country’s greenhouse gas emissions. The UK Government’s Clean Growth Strategy sets a target for as many houses as possible to be upgraded to EPC Band C by 2035 ‘where practical, cost-effective, and affordable’.

With only around 30% of homes currently meeting EPC Band C, that leaves some 19 million homes requiring some form of retrofit over the next 12 years or so. More data needs to be available to provide the basis for retrofit assessment, costing and planning. This includes data that describes the current condition, construction type, heating systems and utility consumption.

The Data Working Group for the Coalition for the Energy Efficiency of Buildings has been established by the Green Finance Institute. It is focused on enabling financial support for retrofits by identifying specific initiatives where the finance community and government can bridge investment gaps that represent barriers to systemic change at scale.

Finance for retrofits can be provided in the form of additional mortgage lending or as non-recourse loans like the US Property Assessed Clean Energy model (where debt is tied to the property not the borrower). To secure this financing, a digital data set will be required that not only supports the retrofit data, but also provides the necessary information for conveyancing; allowing lenders to conduct the necessary due diligence.

Safety: Building a Safer Future

Dame Judith Hackitt’s report on the Grenfell Tower fire, ‘Building a Safer Future’, highlighted the lack of an information management culture in the built environment. The report emphasised the need to collect information on buildings in a safe, consistent way for occupiers and future owners. The report recommended that data to support fire and other safety issues be collected for new buildings and when work is carried out on existing buildings. For individual dwellings, a similar approach should be encouraged to ensure that a data set is available across the full property lifecycle. This data should support quality construction together with information on works and alterations to the existing housing stock.

Planning

The availability of digital data sets to support the planning process itself, and to record the outcomes for future transactions, offers profound benefits for all affected stakeholders.

A variety of stakeholders impact the planning process. These include individual planning applications from householders and developers, policy from central government and the devolved administrations, and local plans made by local planning authorities. Comprehensive and trusted data, available in a digital form, is a prerequisite to allow transparent decisions to be made that balance the needs of all stakeholders and deliver maximum social value.

Common solutions: standards and assurance

The residential property sector is highly fragmented. It is critical that government take a proactive lead to drive, sponsor, and help coordinate change across both the private and public sector.

Government should actively support the development and adoption of a single, open source, free to use, data schema that will support the data needs of the use cases outlined above. Such a schema should be extendable in the future to support other use cases as they arise. The RICS Data Standard (RDS) fulfils all these criteria and is already available.

Building on a common schema, the industry also needs open, free to use APIs to allow interoperability between different data sets.

To protect the data sets and the affected stakeholders, the industry needs an assurance framework that has many of the characteristics proposed for Digital IDs by The Investing and Saving Alliance (TISA) and MyIdentify.org.uk. These trust and assurance frameworks should then work together to provide digital identity verification to ensure that data is only shared between appropriate parties.

With so many of the key property identifiers falling within the remit of the UK Government and its various agencies, the government must free up access to these unique identifiers such as Unique Property Reference Numbers (UPRN), Topographic Identifiers (TOID), and title numbers. It could also support access to relationship mapping and addressing/property matching services, by ensuring they are all either free to use or at a low price point on a per transaction basis.

The UK Government should encourage, and where practical, mandate the adoption of the UPRN and other relevant identifiers across central and local government, and relevant agencies. This would allow them to appear in both digital data sets, and in documents that are used to communicate with consumers, and other parts of government and the private sector. Where government data is not held in a structured, digital form with appropriate identifiers, there should be a coordinated programme to prioritise the digitisation of the most important data sets and to apply the relevant identifiers.