This was at the back of the Affordable Housing Conference taking place in Cape Town this week. The Centre for Affordable Housing Finance in Africa(CAHF), research consultancy 71point4 and Seso Global have joinedforces to develop South Africa’s first blockchain-based propertyregister. And all the properties are government subsidised properties which havenot yet been registered on Deeds Registry. According to Daniel Bloch, the CEO of Seso Global, a blockchainproperty registry company, this will be the first working example of ablockchain-based property registry in South Africa. Aside fromcreating an immutable record of who owns which house, the Sesoplatform facilitates and records transactions such as sales andtransfers out of deceased estates and integrates with third partieswho facilitate transactions, including mortgage lenders. “For the timebeing, property owners will record these transactions at theTransaction Support Centre, a walk-in housing advice office created byCAHF and 71point4 located in the area. But over time, we will recordtransactions through the Seso app” says Bloch. Research reveals that the benefit of the blockchain solution is thatit allows the data to be stored in a decentralised, secure databasethat can be updated without any loss of historic data. This meansthere is a secure, back-to-back record of all transactions that iscompletely tamper-poof. Eventually the vision would be to integratethis record into the Deeds Registry when other impediments to transferhave been removed. Moreover, SA has a serious titling problem. According to Kecia Rust, the CEO of CAHF, the government has builtover three million RDP houses since democracy. But CAHF’s analysis ofdeeds office data indicates that only 1.9 million of these propertieshave been registered. The National Department of Human Settlements,Water and Sanitation (NDHSWS) estimates that the title deed backlogfor RDP properties built prior to 2014 currently stands at 511 752.These properties were given to beneficiaries, but no title deeds wereregistered and handed over. At the same time, there is a backlog of351 470 title deeds on newer properties. In addition, registering these properties so long after they werebuilt and handed over to subsidy beneficiaries is an administrativelycomplex task. In some cases, original subsidy beneficiaries are nolonger living in the properties. Some beneficiaries might have passedaway, some might have tenants in their properties while others havesold their houses informally. “To create a register of property owners we first had to go door todoor to find out who lives in each property and to establish how theycame to be there” says Melzer, founder and lead consultant at71point4. “We hired a team of 17 enumerators and trained them tocollect information and capture supporting documents. Thankfully wecan leverage smart phone to collect the data, but it still requires asignificant effort. It took us two months to cover these areas.” Expert opinion is that the effort is well worth it. Properties in thearea sell for over R200 000 informally – and would sell for more ifthey were listed on a trusted registry and were ‘bankable’. This wouldenable buyers to obtain mortgage finance and create affordability.Without access to mortgages, buyers have to pay cash for a house, oruse an expensive unsecured loan. There are also significant benefitsto the City of Cape Town of being able to access an accurate andup-to-date record of property ownership. Without it, the City cannotcollect revenue from households in the area who are not indigent norcan City departments facilitate building plan approvals. In many cases in the pilot areas, the original beneficiary is stillliving in the property. “We hope that these properties can beregistered in the deeds registry within a few months, and we areworking closely with the City of Cape Town to facilitate that” saysMelzer. “Where the beneficiary no longer lives in the property, we arein the process of tracing the beneficiary to confirm information wehave gathered on who owns the property. We will also be workingclosely with the City on a resolution process where ownership isdisputed.” It will take some time before all the required information has beencollected and validated. It will also take time for validatedproperties to be registered on the deeds registry. In the meantime,we will enable property owners and occupants to keep those records upto date, according to Melzer. “We will also be using Seso’s platform to manage other client servicerequests that come to the Transaction Support Centre from all overCape Town” says Rust. “These include helping clients to regulariseinformal sales and wind up deceased estates. Going forward, as thecountry moves towards an electronic deeds registry, we hope thelessons we have learned will provide valuable evidence to inform thedevelopment of accessible, secure, affordable and efficient mechanismsto facilitate property market transactions. This is important acrossthe market, but particularly in entry level segments of the marketwhere existing mechanisms are simply too costly”. CAHF, Seso Global and 71point4 have a working agreement to extend thispilot into other areas and use cases. There are hundreds of thousandsof RDP properties around the country where no primary transfer hastaken place. In addition, in many areas where title deeds were issued,property owners have transacted informally, which means there is nolonger an accurate record of ownership at the deeds registry.Blockchain-based solutions can help there too. Blockchain can alsoenable households who live in informal settlements and rural areas torecord and maintain land records and secure their rights. “We are verypleased with the pilot results. We think the solution we havedeveloped is scalable, and replicable” says Bloch. That does not meanit is easy but, says Melzer “blockchain technology together thepotential value we can unlock makes it worthwhile”.
