Krystle joined PEXA over 10 years ago and worked with the property industry to design and build the completion platform that transformed the industry and is used for over 90% of property transactions in Australia today. Taking the industry and platform learnings with her, Krystle has moved to the UK to help deliver transformational outcomes for UK citizens and be an advocate for industry reform and positive change.
In the UK, the homebuying process has never been a simple one. Customers face unexpected costs, completion dates move, and it can feel like transactions disappear into a black hole. Digitising the process and providing real time access to property data can help customers save a considerable amount of money, but perhaps more significantly, time. PEXA’s first digitised remortgage transaction took place last year, completing within hours and revolutionising the 150-year-old process, begging the question – just how fast could house sales become in future?
Our research indicates the transaction fall-through rate in the UK is 31%, with completions typically taking between 12 to 24 weeks. Largely due to outdated systems, buyers can be left unaware of what is happening with their transaction, and lenders feel like they lose sight of progress once a conveyancer is instructed. Around four in five (81%) consumers have experienced some sort of detriment in the process, with two in five (38%) having to deal with unexpected costs, often exceeding £1000. Digitising the process is helping to change that.
Obstacles for a speedy completion
Differences between purchasing property in the UK and Australia significantly impact completion timelines. The Australian process is quicker and more assured; sellers must disclose property information upfront to prospective buyers and both sign the Contract of Sale and pay a deposit as soon as the offer is made, giving parties not only more certainty that the sale will complete, but a date when completion will occur. Financial consequences for not meeting the date increase incentive to complete on time. No such guarantees exist in the UK, since parties are not bound to complete until the exchange of contracts.
Further, lack of process and document standardisation has contributed to a lodgement requisition rate of 20-30%. However, in Australia, standardisation, continuous validation of data and overall digitisation has reduced the rate to less than one percent and importantly, has allowed Land Registries to register changes on title instantly
Additionally, lack of a central resource in the UK which gives advisors sight of the transaction’s progress causes further delay. For example, UK firms have to keep watch over clients’ accounts, waiting for funds to arrive from lenders, and hoping they do so before the CHAPS bank-to-bank payment cut off at 6pm on the day of. In Australia, funds move directly between lenders via the central bank. Fragmentation and lack of transparency between UK lenders and firms means advisers are forced seek regular updates from one another, increasing time inefficiencies and operational costs.
The power of technology
Technology is revolutionising the system as we know it. PEXA launched in Australia in 2010, becoming the first country to launch a digital process for synchronised lodgement and financial settlement for property. Today, remortgages can complete in as little as one day, not months. Our Australian infrastructure has facilitated more than 16 million transactions, streamlining the process and improving consumer outcomes.
While the entire process can’t be digitised, by providing a platform which automates the tasks which do not require specific legal or specialist oversight or expertise, costly manual tasks and time wasted can be a thing of the past – both for lenders and consumers.
Providing stability in a volatile economy
Rising interest rates continue to have a significant impact on the mortgage market. Banks are reacting to rising borrowing costs and wholesale repricing is common. The timing is unfortunate as hundreds of thousands of borrowers who took out a two-year fixed-term deal during the 2021 stamp duty holiday are now remortgaging.
As technology and data access continues to improve and we unlock new processing speeds, transactions continue to get faster. With inflation in the UK showing slow signs of correction, consumers will be relying more heavily than ever on their advisers to see their deals through to completion faster than product pricing shifts. In addition to the latest tech, further industry collaboration that shapes our collective thinking will help to improve efficiencies. One day, 20-minute house sales might become a reality, and for now, it’s an admirable north star to shoot for.
Written by Krystle Kocik, Chief Product and Experience Officer, PEXA
