Has Cryptocurrency Really Changed The Property Market?
by Lea Emery on 9th September 2018
Cryptocurrency never ceases to make headlines, but for many of us it still exists in the abstract. Partially because the values and numbers involved in cryptocurrency seem larger-than-life, it often feels like it exists in another dimension. Bitcoin, for example, jumped up to around the £15,000 mark last year, but currently sits at around £5,300 pounds. And the truth is, very few of us actually have any interaction with cryptocurrency beyond the headlines, let alone using it ourselves. But there's still talk that cryptocurrency may become the future of the property market — the question is, how far in the future are we talking about?
The truth is that cryptocurrency is still in its infancy and its real-life, day-to-day use is still in flux. Banks, lenders, even governments are coming to terms with how to interact with and manage cryptocurrency. And the property market, which has long been touted as the future of crypto, is no different. So where do things stand now? If you're looking to buy or invest in property and you're not sure how cryptocurrency plays into it, here's what you need to know.
Can You Buy A Home With Cryptocurrency?
If you're looking to buy a home, cryptocurrency does seem to be an option — depending on your circumstances. Although a home in Colchester was bought outright by a Bitcoin miner — and the Land Registry even let him register the price in Bitcoin — things are a little more complicated if you're looking for a mortgage.
Can you get a mortgage with cryptocurrency? The answer is frustratingly murkey. Earlier this year, a man who had built up £40,000 in savings was unable to secure a mortgage — and he attributed this to the fact that he had made his savings through cryptocurrency. But that's only one instance. "A number of building societies will consider Sterling payments from a crypto source if the customer can provide the necessary documentary evidence to satisfy anti-money laundering due diligence," a spokesperson for the Building Societies Association (BSA) has said.
Much of it will be down to the bank or lender. Santander, Skipton Building Society, and Royal Bank of Scotland have all said that they do not have a hard-and-fast rule on cryptocurrencies, but assess every application for a mortgage on a case-by-base basis. Barclays, however, has said that deposits in the form of cryptocurrency will not be allowed and Halifax is believed to have done the same. When it comes to income, Barclays and Santander have said explicitly that cryptocurrency investments would not be recognised as income when determining affordability — perhaps to do the high volatility of cryptocurrency.
It's undoubtedly complicated and the situation is still evolving, but the current position seems to be that you can purchase a home outright and you may be able to use cryptocurrency as a downpayment, especially if transferred into pounds. When it comes to showing an income, however, it seems unlikely that cryptocurrency will do the trick — but always be sure to talk to a bank or lender directly, as this area is ever-changing.
Interestingly, the co-living group The Collective is keeping ahead of the curve by allowing cryptocurrency for rent payments — so in some cases renting may be more feasible than buying, when it comes to cryptocurrency.
Can You Invest In Property With Cryptocurrency?
The Collective is a good example of how smaller companies are able to adapt more dynamically and efficiently to new funding sources — and the same is true with investments. While traditional banks are still grappling with cryptocurrency, there are other investment opportunities for those who make and save their money using crypto. Recently developers Baroness Michelle Mone of Mayfair and Doug Barrowman have announced that they will accept cryptocurrency from those wishing to invest in their flat development in Dubai. On the global market, certain countries are more open to crypto investment than others — with Malta opening up to the new currency so much it has earned itself the nickname "Blockchain Island". It will be interesting to see how different developers — and different governments — respond to crypto in the future.
How Will Cryptocurrency Change The Buying Process?
One of the most exciting crossovers between cryptocurrency and property comes in the potential streamlining of conveyancing. Using Blockchain — which is essentially a digital ledger of all transactions made in cryptocurrency — could make the conveyancing process much faster, ultimately leading to fewer sales falling through. It allows monitoring and authenticating to happen quickly, with a record of every transaction made available online to everyone.
And in some ways, it's already arrived. Last year, the first property transaction using Blockchain was completed — and the property went from being marketed to a verified online exchange in one week. Thirty percent of property exchanges that fall through to do so because of conveyancing issues and delays, so this could be a total transformation of the exchange process. This has special implications for the international property market, where paperwork and red tape can cause transactions to lag. But again, it's early days. How widely — and how quickly — this process will be adopted remains to be seen.
The possibilities for incorporating cryptocurrency into the property market are definitely exciting — and we're starting to see a shift toward welcoming crypto payments and investments. But to say that it's transformed the market would be an overstatement — for now, at least. If you're looking into buying or investing with cryptocurrency, you'll have to talk to your bank, lender, or developer about their policies. The future might be coming, but it's not quite here yet.