A blockchain-based solution has been piloted in South Africa for property registrations. This relates to government built and subsidized properties for disadvantaged citizens. So far, the blockchain-based property register is reported to consist of approximately 1,000 properties located in four sites in Makhaza, Khayelitsha.
According to Daniel Bloch, the CEO of Seso Global, a blockchain property registry company, this will be the first working example of a blockchain-based property registry in South Africa. Aside from creating an immutable record of who owns which house, the Seso platform facilitates and records transactions such as sales and transfers out of deceased estates and integrates with third parties who facilitate transactions, including mortgage lenders.
“For the time being, property owners will record these transactions at the Transaction Support Centre, a walk-in housing advice office created by CAHF and 71point4 located in the area. But over time, we will record transactions through the Seso app” said Bloch.
The property title deeds problem in South Africa
South Africa has a serious housing titling problem, especially when it comes to government subsidized housing. According to Kecia Rust, CEO of CAHF, the government has built over three million RDP houses since 1994, however, CAHF’s analysis of deeds office data indicates that only 1,9 million of these properties have been registered.
South Africa’s National Department of Human Settlements, Water and Sanitation (NDHSWS) estimates that the title deed backlog for RDP properties (government subsidized housing) built prior to 2014 currently stands at 511,752. These properties were given to beneficiaries, but no title deeds were registered and handed over. At the same time, there is a backlog of 351,470 title deeds on newer properties.
Registering these properties so long after they were built and handed over to subsidy beneficiaries is an administratively complex task. In some cases, original subsidy beneficiaries are no longer living in the properties. Some beneficiaries might have passed away, some might have tenants in their properties while others have sold their houses informally.
Benefits of a blockchain-based solution
Although some ICT professionals have questioned the merits of using a blockchain-based solution as a database, there are some benefits when it comes to registering and storing property details.
In this case, the blockchain-based solution allows the data to be stored in a decentralised, secure database that can be updated without any loss of historic data. This means there is a secure, back-to-back record of all transactions that is completely tamper-poof.
“To create a register of property owners we first had to go door to door to find out who lives in each property and to establish how they came to be there. We hired a team of 17 enumerators and trained them to collect information and capture supporting documents. Thankfully we can leverage smart phone to collect the data, but it still requires a significant effort. It took us two months to cover these areas,” said Ilna Melzer, founder and lead consultant at 71point4.
The other benefit of using a blockchain-based solution for this is that it would enable property buyers to obtain mortgage finance. Without access to mortgages, buyers have to pay cash for a house, or use an expensive unsecured loan.
There are also significant benefits to the City of Cape Town of being able to access an accurate and up-to-date record of property ownership. Without it, the City cannot collect revenue from households in the area who are not indigent nor can City departments facilitate building plan approvals.