How blockchain will change property market
Since the middle of 2017, blockchain has become one of the trending topics in business, media and among the public. The government and various companies got interested with the technology. Blockchain has also proved useful for housing & utilities service and residential developers. There are currently no finished blockchain powered projects in housing & utilities service, but in the nearest future, there will be. Rosreestr already does register papers with the use of blockchain. Today we are telling you in detail about leveraging the technology.
What is blockchain for in housing & utilities service?
In October 2017, Alexander Sidyakin, senior vice-president of the State Duma Committee on Housing Policy and Housing and Utilities Service has come up with the offer to switch housing & utilities service over to blockchain. In his opinion, the transparency of data storage will help to raise solid investments for housing & utilities service.
‘With the use of development institution, we must not only complete the programs of resettlement of the dwellers of hazardous housing, but also make a market of infrastructure bonds that will work for the upgrading of the sphere. In whatever form this institution can operate, we must work on digitalization of the sphere, including the leveraging of blockchain systems. I think we shall work out this issue jointly’ – the government official said.
In March 2018, it became known that the Ministry of Construction, Housing and Utilities has started developing blockchain system of resources consumption record. Blockchain will help to know precisely how much water, gas or electricity is consumed per each house or apartment as well as track utility services payments.
The main advantages of blockchain can really help to solve a number of big problems of housing & utilities service in Russia.
Transparency of charges and payments
Blockchain based system will enable tracking accurate data on resources consumption. It is expected that with the introduction of blockchain in housing and utilities service real estate owners will not be able to forge the data on electricity consumption. However, it will be fair if managing companies and housing maintenance offices also provide the data on the flow of the dwellers’ funds.
A similar pattern shall be implemented in entertainment industry. Online movie theater TVzavr is planning to start using blockchain for payment transactions with the users in autumn 2018. At paying for viewing a movie, the viewers will be able to see how their payment is distributed between filmmakers.
For housing and utilities service, blockchain can be become a real revolution. The technology will help to turn around the relations between real estate owners and managing companies. It’s one thing to pay for communal services and be vague about what your money are spent for. It’s another to pay your bills and see that in the last month your 3000 rub were part of the yard man’s salary, and in the next month, apart from other things, your money will pay the redecoration of the staircase on the ground floor.
It is an unfamiliar pattern for Russia so far. Blockchain will help to track payments and thus raise the awareness of the parties. Real estate owners will be aware of the activity of managing companies, and persistent nonpayers will face the pattern that will make nonpayments more difficult.
Solving the problem of nonpayers
The Head of Saint-Petersburg Georgy Poltavchenko has told that huge debts of managing companies to communal resources providers have been accumulating for many years. In 2015 and 2016 alone total debt amount has raised by 25%. Then managing companies have launched regular checkup of resource meters. This helped to expose nonpayers, and in 2017 to cut the amount of debts by 4.6%.
The officials believe that blockchain will help to control payments. In his annual report, Poltavchenko has said, ‘The ‘Smart City’ project office is currently developing blockchain based digital platforms. Leveraging these platforms will prevent forging the data of meters or the database for billing, as well as issuing double bills, extra charge and delay in the transfer of the dwellers’ payments’.
Companies supporting the project
‘Megafon’ is already developing blockchain-based solution for housing & utilities service. With the help of the future service, real estate owners will receive electronic bills and pay them.
‘ДОМ.РФ’ and ‘Vostok’ companies made a statement about creating a blockchain-based platform that will help to perform process automation in housing sphere. It is expected that the service will support not only the market of housing & utilities service, but also the work of Rosreestr and the participants of the shared construction market.
‘Creating a blockchain based platform will ultimately allow transferring the whole procedure of purchasing real estate for citizens to online format, and thus conducting application for mortgage loan, purchase and registration of ownership in ‘one-stop shop’ mode’ – said managing director of ‘ДОМ.РФ’ Alexander Plutnik.
How we can introduce blockchain in the system of housing & utilities service
Blockchain can be public or private. Public blockchain is connected with cryptocurrencies, i.e. the purchase, exchange and storage of cryptocurrencies. The first and most popular public blockchain is the one of Bitcoin.
Private blockchain can be used by certain companies and organizations in different spheres. Private blockchain provides access to the database only for the individuals that have access keys. Within a blockchain system, various users can have access to various categories of information (i.e. depending on their job position).
It is obvious that housing & utilities related services will be using the developments of private blockchain. The system can operate in the following way. The suppliers of resources – i.e. water, gas and electricity – will have their blockchain servers installed at an apartment house, managing company or housing maintenance office. These blockchain servers will allow exchanging and centralized storage of the data at one certain location. Real estate owners, maintenance office employees and other duty holders will have access keys. House tenants will only be able to see the data on their own apartments of course, whereas maintenance office or managing company’s employees and resource suppliers will see the data according to their job positions and authority.
In this case, managing company will control the data of resource meters, and making corrections by hand or forging the data (by house tenants, maintenance company or resource suppliers) will be impossible due to blockchain. House tenants and bill payers will be able to track the use of their money. This will render the work of maintenance companies, condominium partnerships and other parties of the communal service market transparent.
Implementing blockchain in the work of Rosreestr
The main advantage of the use of blockchain for registering real estate items will be saving time for filing the documents for real estate buyers. In addition, blockchain will allow registering real estate ownership without intermediaries, which will considerably cut down extra expenses of real estate buyers.
The technology is already simplifying the registration of shared construction contracts. In February 2018, buyers of apartments in Leningrad region registered the first contracts of this kind. However, the technology yet needs to be polished, so paper copies of the contracts are still kept.
If the data entered in blockchain are legitimized, certified copies from Rosreestr will be no longer necessary. Buyers, sellers or any other interested individuals or state organizations will be able to address a blockchain contract database directly.