A paperless system could save as much as £30 million per annum in reduced administration, according to some estimates. The Land Registry's consultation is just the first step in a huge project to reconstruct a 140 year-old system of land registration. Its aim is to have a pilot e-conveyancing system in place by late 2005 or early 2006.
Legal and practical context
A legal framework is now in place which allows -- in theory -- for paperless transactions in the property context. The Electronic Communications Act 2000 gives Ministers the power to update the statute book to permit the use of e-communications in specific contexts. Such a draft order relating to e-conveyancing was issued for consultation last year. When enacted, this will disapply paper -based requirements for contracts for sale of land, mortgages, and other property documentation under existing legislation. The Land Registration Act 2002 which reached the statute book earlier this year and which will come into force in 2003, sets out a broad legal framework for establishing a system of electronic conveyancing. The next step is therefore to devise an electronic network linking conveyancers, lenders and other property professionals with the Land Registry and the Inland Revenue to enable every stage of the process -- from investigation of title, exchange of contracts, and payment, through to completion and registration -- to be carried out online.
The wide-ranging and lengthy consultation document flags a great number of issues for consideration. In particular, it highlights the following key requirements of an e-conveyancing system: it will be paperless; there should be no gap between completion of a transaction and updating of the Land Register, it should allow for "chain transparency" -- thereby making chain transactions less stressful for those involved; it should involve a permanent connection between property practitioners and the Land Registry; it should be more secure and fraud-resistant than the present system; and it should allow for simultaneous money transfers.
The IT dimension
IT suppliers, as well as lenders and conveyancers, could stand to gain from a fully electronic network. One of the next steps in the process will be for the Land Registry to find private sector partners to work on the design and creation of the new system. From a technical perspective, the proposals raise a number of interesting issues which include:
- Interoperability: interoperability issues will need to be addressed to ensure that users are able to connect to the central system from a range of different software platforms;
- Network access agreements: agreements will need to be put in place for those accessing the system in order to ensure appropriate levels of security.
- Security issues: as so much is at stake and because the conveyancing process has always been a target for fraud, security will be paramount. Safeguards will need to be built in to prevent unauthorised access -- and to ensure that any breaches are detected rapidly -- and to ensure that those with access use the system only for properly authorised purposes. The technology will need to provide a clear audit trail to make it clear who does what, and when. Filters and firewalls will be needed to prevent hacking as far as possible. Users of the system, e.g. conveyancing firms, will need to follow appropriate security procedures.
- Electronic signatures and digital certificates: electronic signatures and digital certificates are among the options considered to make electronic documents secure. At this stage it is envisaged that secure e-signatures based on public key infrastructure (PKI) will be used, however the consultation seeks views on suitable alternatives. The document also seeks views on the use of certification to ensure authenticity of e-conveyancing documents. Online conveyancing offers a significant opportunity to boost the more widespread use of e-signatures.
- Electronic funds transfer: speeding up the transfer of funds is an important element of the proposed new system. The consultation considers the scope of such a system (i.e. whether it should be capable of dealing with all the payments which change hands during the course of a conveyancing transaction, including stamp duty, land registry fees and solicitors' fees) or simply the transfer of the mortgage/sale proceeds from lender to buyer and then to the seller. It also looks at the options for electronic funds transfer based on systems already in existence such as CHAPS and CREST. Timescale
The deadline for responses to the current consultation is 30th August. A series of more detailed discussions or consultations commencing in 2003 will then focus on specific areas, including detailed systems design, the use of e-signatures, and drafting network access agreements. The IT procurement stage is expected to take about two years, with a working system being built during 2004/2005. The aim is to launch a pilot by late 2005/ early 2006 and to roll out a voluntary system during 2006. By the Government's own acknowledgement, this is not a system which will appear overnight.
If you would like more details about the IT implications of the proposals, please contact Marc Dautlich