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Privatised land title offices can harness new technologies to provide a better service

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It’s highly likely that all Australians buying or selling property or subdividing land will soon be dealing with privately operated land title registries. Both sides of politics in Australia appear supportive of privatising these registries and it is happening fast.

The New South Wales Liberal government privatised the operation of its land registry in 2016. The South Australian Labor government did so earlier this year. Now, Victorians await Treasurer Tim Pallas’ decision on whether that state’s Labor government will follow suit.

The robust titling systems in Australia’s states and territories are key contributors to the country’s economy. Secure registries provide the foundation on which the enormous wealth in real estate rests. Mortgage lenders rely on the low risk resulting from a state guarantee of title in securing real estate loans.

Privatisation processes need to protect the integrity of Australia’s titling systems. However, with the rise of relevant technology, privatisation presents an opportunity to transform titling systems to operate even better in the public interest.

A history of mixed success

While rare, privately operated land title offices do exist elsewhere.

A private operator, Teranet, administers the buying, selling and subdivision of properties in the Canadian provinces of Ontario and Manitoba.

In 1991, Teranet engaged in a public-private partnership to modernise the titling system in Ontario. In 2003, the Ontario government sold half its shares in Teranet to a private consortium.

In 2010, Ontario extended Teranet’s operating licences for 50 years. Manitoba has licensed Teranet to run its land registry for 30 years.

In other jurisdictions, there have been unsuccessful privatisation attempts. In 2013, the Canadian province of Alberta’s Real Estate Council concluded that a proposal to privatise the title office was not in the public interest. And last year, the province of Nova Scotia assessed the prospect of a privatised titling office and concluded there would be no considerable gain from it.

The UK Conservative government in 2016 also examined this idea but did not go ahead with privatisation. This was primarily due to a lack of support from the property industry and a fear of public backlash.

What are the risks of privatisation?

There are many arguments against privatising title offices. These include:

  • increased fees

  • a natural monopoly

  • banks requiring title insurance for purchasing properties

  • risks to the integrity of land registration processes and property information

  • depreciating existing skillsets in the title offices that are hard to source

  • the prospect of jobs moving elsewhere and even overseas.

Fees in Ontario’s privatised title office are, on average, higher than in Alberta’s public title office. For example, a title search in Ontario costs three times more than in Alberta. To gain access to property information in Ontario, users are required to buy specific software.

The NSW government also increased fees just before engaging its private operator.

What will land titling look like in future?

The way land titles are issued, bought and sold in future will be different. Who would once have thought that we, through smartphones, could carry the map of the entire world and a positioning system in our pockets?

While current land titling systems are efficient, privatisation provides an opportunity to harness technologies that transforms these for faster and more automated processes, while removing intermediary fees and reducing red tape.

Technologies such as blockchain allow instant exchanges of assets online, including land and property, and transparent verification.

Using these techniques, titles and other documents can be encrypted and protected in digital transactions. This challenges the need for lawyers to check documents, financial institutions to prove money exchange, insurance companies to back your title, and title offices to register the transactions.

Consumer-grade technologies such as drones, 3D scanners and smartphones also make it easier for the public to collect land information. This will challenge regulated professions such as land surveying. These professions need to be rethought in a technology-driven society where land data collection becomes accessible to everyone.

Advances in technology will soon be challenging several facets of land-titling systems in Australia. Privatisation can be an opportunity to reform and update these systems, so that regulatory requirements are either reduced or automated. The next generation should be able to buy a property and pay less or no bank fees, title insurance and stamp duty.

The ConversationMohsen Kalantari receives funding from Australian Research Council, Bushfire and Natural Hazard CRC, the University of Melbourne, Open Geospatial Consortium, Governments of Victoria, Malaysia, Singapore and Hong Kong, and Australian Urban Research Infrastructure Network. He is a member of Surveying and Spatial Sciences Institute, and affiliated with International Federation of Surveyors. However, the views expressed in the article are those of the author and do not necessarily reflect those of these groups.

Gary Jeffress does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

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