If you want to get into the property market, two of the biggest barriers are having a large enough deposit followed by the transaction costs.
One company which has offered a solution to the deposit issue is property technology company Bricklet, which created a platform where people could buy a percentage of a property with a lower deposit with their stake co-funded by other investors.
Launched last year on the “fractional” ownership models, Bricklet has built up a portfolio of residential and commercial property worth $155 million.
Now, the company is attacking the second barrier – the transaction costs – using blockchain technology to both lower the cost and slash the time of settlement.
Investors on the Bricklet platform are able to trade their stakes in the same way people can buy and sell shares, but up until now this has incurred an average transaction cost of $1000 and has taken six weeks to complete. An investor can buy a share in a house, or a commercial development, and will soon be able to trade it in real time without engaging a conveyancer or solicitor.
The blockchain based platform cuts the transaction cost down to $10 with a promise that settlement will be instant. In effect, the platform will transform Bricklet into a – much smaller – property based version of the sharemarket, enabling people to buy and sell their shares in property much more frequently.
“The future of this technology is broadening its use to register single ownership properties, taking cost and time out of the process for all buyers, sellers and taxpayers,” says Bricklet chief executive Darren Younger.
The platform operates off the Australian Property Co-Ownership Register, a distributed ledger or synchronized databased which will ultimately link to all states. When the platform launches later this, it will begin with NSW properties first and then add other states.
Bricklets investors can get into the property market with a deposit as low as $20,000, and so far it is commercial property which has been the most popular and comprises more than 80% of the $155 million investors.
Up until now, Bricklets has been restricted to newly constructed homes, but existing homes are expected to be an option from next year.
It’s an idea that also has the backing of major property companies, with Mirvac and Stockland both shareholders.