Can tokens take the agony out of housebuying?

Blockchain could transform financial transactions as money moves at ‘the speed of light’. Tokenisation is now the City of London’s new buzzword

Homebuyers are all too familiar with the agony of completion day. Calls fly back and forth between estate agents and solicitors to see if funds have moved up the chain. Only once the money has landed in everyone’s bank accounts will the sought after keys be released. That pain may soon be a thing of the past under new plans to digitise payments: so-called tokenisation — the new buzzword in financial circles.

If implemented, the technology could revolutionise not just housebuying but payments between buyers and sellers of all stripes. It could even enable consumers to buy assets in fractions — a slice of a gold bar, for example. Trade body TheCityUK reckons London needs to be a leader in tokenisation if it is to maintain its status as a top financial centre. In a recent report with professional services firm PwC, it predicted that tokenised assets would become the “default way in which securities and assets are traded” — and warned there was a risk of regulation falling behind.

At TheCityUK annual dinner last week, chair Omar Ali warned guest speaker Lucy Rigby, the City minister, other countries were “going faster” in the race for digital supremacy, particularly the US, the United Arab Emirates, Hong Kong and Singapore. “This is fantastically important because it’s the future of the industry,” Rigby acknowledged.

So what is tokenisation, and what does it mean for you and I? Some see it as merely the latest iteration of City share trading. Young men once used to run around the Square Mile distributing pieces of paper to show share transactions. In the 1980s, this was replaced with electronic bank transfers.

A building, a real asset, could be represented by 1,000 tokens

Tokenisation tends to use blockchain technology — a type of decentralised digital ledger that is perhaps better known as the basis for cryptocurrency. “A blockchain is a type of database for record-keeping,” said Kara Kennedy at JP Morgan. “Today [in securities markets] record-keeping is maintained on ledgers held by centralised institutions; a blockchain is a decentralised ledger that enables transfers to take place peer-to-peer.”

In effect, this decentralisation removes the need for a main repository like a central bank. But what, then, is a token? “Tokenisation is essentially the representation of an asset or value on the blockchain.

That’s its simplest form,” said Kennedy, who is based in Edinburgh and is global co-head of the American bank’s blockchain business, known as Kinexys. So why does it matter? After all, the Bank for International Settlements, the central bankers’ bank, points out people have been transacting in tokens for centuries, citing the Chinese use of seashells as a form of currency 3,000 years ago.

But this new form of tokenisation is more sophisticated than modern money. For instance, digital tokens are programmable, which means you can set conditions for when money is released. Sasha Mills, the executive director of financial markets infrastructure at the Bank of England, explained the ramifications: “If I’m standing on my doorstep, waiting for my online shopping, the money doesn’t go through until I’ve got the goods in my hand.”

Manish Kohli, head of HSBC’s global payments solutions business, said that, with tokens, money could also “move at the speed of light”. Speaking from New York, he explained that assets could be broken up into tokens to make them more affordable — like the tower he was sitting in. “This building, a real asset, could be represented in 1,000 tokens, say, which can be sold to individuals,” he said. In Hong Kong, HSBC is using the concept to give retail customers access to gold. “Gold is very clunky to own because it’s heavy, it’s difficult to transport,” he said.

With this new technology, customers could own a digital token representing a fraction of that gold. In the financial markets, tokenisation could also enable more efficient borrowing. Kennedy said: “If a company has cash coming in at midday but needs to borrow for two or three hours until it arrives, you can use a blockchain-based intraday loan to borrow for a certain period of time.” That period could be as short as hours or even minutes. Mills at the Bank of England pointed to the use of tokenisation in posting collateral — a sort of guarantee for a transaction.

She believes it could help facilitate growth in the economy, as the same collateral could be put up to support a larger number of transactions. “I can programme my money so I can use my collateral for a few hours in a jurisdiction,” she said. “It’s very efficient, which is obviously beneficial for growth.”

But the City is clearly racked with anxiety that Britain is falling behind in the race to harness digital assets, especially after President Trump published an act last year to set out rules for dollar-denominated stablecoins (a type of cryptocurrency backed by a traditional currency). As the name suggests, their value is supposed to be more stable, unlike cryptocurrencies such as bitcoin, which float freely; last week bitcoin suffered another sharp fall in its value. These are different to the “tokenised deposits” that, for instance, a high street bank would use.

The Bank is consulting on a regime where it would stand behind stablecoins issued in pounds. Mills said: “For stablecoins to operate in the UK, in sterling, they need to meet the standards of money. What we’ve done is to say that if it looks and smells like money, we need to ensure it operates like money; we will be a banker to those stablecoins.”

She was talking about stablecoins for everyday usage, not ones to buy crypto. “From the Bank of England’s perspective, we want all money to be trusted and robust, regardless of whether it’s a digital form of something, a traditional form or a new form.” She took issue with the suggestion the UK was falling behind.

While Trump’s act has been published, the details are still being worked through. Mills said there would be a “live regime” for stablecoin issuance here by the end of the year. The Bank is running a sandbox regime — where market players can test their ideas without risk of punishment when things go wrong — for other digital issues. It has already tested the idea of using tokens to speed up housebuying through tests with the Land Registry.

The financial industry is also running the Great British Tokenised Deposit project, led by UK Finance, and in the summer will begin to test remortgaging, peer-to-peer transactions and digital bond settlement. And the government is working on a digital gilt, known as a “digit”, which Rigby hopes “is going to catalyse the use of some of this technology”.

Announcements on this project are expected in the next week. But the City’s frustration is also generated by the government’s failure to name a “digital markets champion” six months after promising to do so. Those in the industry note that tokenisation has been used within banks but not so much between banks, which will be the next stage of development.

And some, such as Hilary Allen, a professor at the American University Washington College of Law, warn of a “dark side” to tokenisation, which could feed instability in financial markets in times of turmoil. While the the idea of a tokenised remortgage might seem a long way from reality, Peter Left, the head of digital and markets innovation at Lloyds Banking Group, said: “It’s an aspiration … this could become more prevalent within a time frame of 12 months.”

Source: The Sunday Times

The foreign owners ‘hiding’ £190bn of UK property

The ultimate owners of almost 45,000 properties worth an estimated £190 billion are hidden from public view via offshore companies, in what experts say is likely to be a mass breach of the UK’s anti-money-laundering rules put in place after the Russian invasion of Ukraine.

A new investigation reveals how these strict government rules—designed to ensure homes are not being used to launder ill-gotten money or hide cash in the case of international sanctions—are being widely ignored and not policed.

After the Economic Crime Act passed into law in March 2022, foreign owners of UK property were given until January 31, 2023, to register on the Register of Overseas Entities, managed by Companies House, and to declare the identity of the “beneficial owner”. This is defined as anyone who owns or controls an overseas company that owns property, typically by holding more than 25 per cent of the shares or voting rights.

Failure to register can result in fines of hundreds of thousands of pounds, plus criminal prosecution. The requirement applies retrospectively to overseas entities in England and Wales that bought property or land on or after January 1, 1999; in Scotland after December 8, 2014; and in Northern Ireland from September 5, 2022.

Tax Policy Associates, a legal policy think tank run by Dan Neidle, a former tax lawyer, examined a Land Registry list of 97,978 properties registered to offshore companies in England and Wales, then cross-checked how many had registered their ultimate owners with Companies House, as is legally required.

In the case of 43,401 properties (about 44 per cent), the think tank said it was impossible to find out who truly owned them. In these cases, it found that the property owners had either:

• Not registered at all (8.4 per cent, or 8,198 of the 97,978 properties);

• Registered the property but claimed to have no beneficial owner (9.5 per cent, or 9,265);

• Registered but entered another offshore company as the owner (5 per cent, or 4,942);

• Listed a trust as the owner (21.4 per cent, or 20,996).

Note: Trusts can legitimately hold property, but the people who ultimately control or benefit from them should be registered as beneficial owners—something Neidle says often does not happen, with lawyers or accountants listed instead.

The proportion of properties added to the register but claiming to have no beneficial owner has been growing since 2022. By December 2022, this group accounted for 9.1 per cent, rising to 12.4 per cent the following year and 19.2 per cent last year.

Neidle did not include Scotland or Northern Ireland in the research because of the different ways data is stored there.

Neidle says some overseas owners may not have registered simply by mistake. “Some of this will be accidental, but we think a significant proportion is likely to be intentional,” he says.

Some organisations may claim—correctly, but in rare cases—that there is no single owner with more than 25 per cent control, so none needs to be registered. This may apply to large developments run by pension funds, such as purpose-built rental developments.

As well as human error or ignorance of the rules, Neidle believes one motivation for failing to register could be to avoid paying capital gains tax when selling—non-UK residents have been required to pay it since April 2015.

By hiding their identities, it becomes harder for HMRC to track down real owners for unpaid tax, Neidle says. “It’s important we get to grips with this, from a tax-evasion perspective as well as the more obvious sanctions-busting and money-laundering ones,” he adds.

Campaigners say poor enforcement by Companies House, owing to limited resources, is encouraging a slapdash approach to the register because people believe they will not be caught. Those failing to correctly register properties face civil financial penalties of up to £50,000 per home, plus additional fines of up to £2,500 per day that the property remains unregistered, on top of possible criminal prosecution that could lead to further fines and even imprisonment.

However, last year it emerged that only 3 per cent of penalties (14 out of 444) issued to non-compliant offshore companies were collected, with £700,000 recovered from fines totalling £22.99 million. “It looks like a classic example of a policy being introduced without the enforcement resources to support it,” Neidle says.

How—and where—the money is being concealed

By far the largest number of overseas structures holding English and Welsh property recorded on the Register of Overseas Entities are based in the low-tax Crown dependency of Jersey.

Some 3,234 properties that claimed there was no beneficial owner, for example, are registered with Jersey-based companies. In addition, 6,715 of all trusts listed are financial services companies in Jersey. The island also has 1,883 properties where another offshore company is named as the owner—the highest figure in all three categories.

The country with the largest proportion of unregistered owners is Saudi Arabia, with 234 out of 252 properties (92.9 per cent) not listed. In one case, 125 properties owned by a single Saudi company are not registered with Companies House.

Notably, a number of entities in Liechtenstein, known for its strict banking privacy laws and favourable tax rates, have failed to declare a beneficial owner—107 of 468 properties (22.9 per cent).

No beneficial owner has been declared in 49.2 per cent of UK properties registered to French companies, while in the case of Denmark, the figure is 63.5 per cent.

The top five residential properties owned by trusts or overseas companies

The vast majority of properties with no overseas beneficial owners registered are in London, with an estimated:

• £38 billion worth of properties listing only trustees;

• £22 billion with no owner listed;

• £37 billion with owners listed as overseas companies;

• £10 billion not registered at all.

In total, foreign owners in the capital account for £107 billion of the £188 billion of property in England and Wales where ownership has not been properly declared.

• The most expensive home on the register is in Holland Park, west London, purchased for £53 million in 2016 by a company in the British Virgin Islands. The beneficiaries are listed as two Isle of Man trustees.

• The second-equal most valuable property is also in Holland Park and was bought for £21 million by a Bahamian company in 2016. The beneficiary is listed as a Cayman Islands trustee holding the home for an unidentified party.

• A flat on Horse Guards Avenue, near St James’s Park, was bought for £21 million by a Cypriot company in 2023. The beneficiaries are two individuals working for Cypriot firms, acting as trustees for an unknown party.

• An apartment on Grosvenor Square, near Hyde Park, was bought for £20 million by an Isle of Man company in 2021. The beneficiary is an Isle of Man trustee company.

• Finally, an apartment at Park Crescent, on the edge of Regent’s Park, was bought for £18 million in 2021 by an American company.

There is no suggestion of wrongdoing in any of the above structures.

What should be done now

Margot Mollat, a senior researcher at the anti-corruption body Transparency International UK, says enforcement must be stepped up.

“It must be remembered that the original urgency for this disclosure, after the invasion of Ukraine, was to help us understand who owns property in this country. Until we fix these transparency loopholes, we don’t have a clear picture,” she says.

Transparency International UK’s own report, Through the Keyhole, published in February 2023, found that almost 35,000 properties had missed the registration deadline. It also highlighted the proliferation of companies registered in the British Virgin Islands, Jersey, and the Middle East.

“While there has been good progress, there is still some way to go before we truly know who owns property here,” Mollat says. “As much as Companies House is trying to enforce this to the best of its ability, it is frequently chasing companies in remote jurisdictions.

“Some of these companies may have been redomiciled, changed their names, or reincorporated. So even if the property hasn’t been sold, the entity named in the register may not match the entity named on the Land Registry. That creates confusion and raises questions about the system. Enforcement is quite tricky.”

As part of an anti-corruption strategy published in December, the government has promised to review how the register operates to “better identify and verify beneficial ownership of assets, close loopholes, and ensure systems are robust against misuse”.

In a possible signal of tighter trust-related rules, it added that arguments for transparency “are finely balanced with the right to privacy, so the government must consider this matter carefully”.

Baroness Margaret Hodge, the government’s new anti-corruption champion, will lead the review, with a report expected this autumn.

The government says: “We will look at this report carefully as part of our commitment to fighting illegal financial activity through the Register of Overseas Entities. Companies House can issue warning notices and impose financial penalties on overseas entities that fail to register or comply with ongoing requirements, and these entities are prevented from selling, leasing, or raising finance against their land until they comply.”

Source: The Times

Women go solo as they climb the property ladder

Mortgage lenders are noticing the new trend among those buying alone as the gender pay gap narrows

On Buckingham Street, just off the Strand in London, an elegant Georgian townhouse with a storied past is on sale for £3.25 million. Its blue plaque marks it as the former headquarters of the Women’s Social and Political Union and the place where the suffragette Emmeline Pankhurst once stood at an upstairs window, addressing the crowd below. “We are here, not because we are law-breakers. We are here in our efforts to become law-makers,” she declared, her voice carrying down to the River Thames.

Pankhurst was speaking to a crowd of women who would not have been able to get a mortgage to buy the house she was speaking from, no matter how much they earned. In Edwardian Britain, women were barred from taking out a mortgage or any form of credit without a male guarantor.

It would be another 60 years before that changed. This year marks the 50th anniversary of the Sex Discrimination Act 1975, the landmark law that outlawed discrimination in employment, credit and services on the grounds of sex or marital status.

For the first time, women could open bank accounts, apply for loans and take out mortgages in their own names. “The change in women being able to have access to a mortgage in their own name is within my lifetime,” says Helen Pankhurst, great-granddaughter of Emmeline and convenor of the women’s rights campaign group Centenary Action. “And we know women still struggle with the motherhood penalty, the gender pay gap, and the pension gap.

Charting a century of progress, from suffragettes to independent homeowners  

Something so fundamental as financial independence took decades to achieve, and it reminds us that the fight for equality is far from over.” Half a century later, the evidence of that hard-won independence is no longer written on placards, but on property deeds. Skipton Building Society processed 11.5 per cent more solo female mortgage applications than applications from single men in 2024.

Skipton also found that 37 per cent of women planning to buy a first home intend to do so alone, compared with 35 per cent who plan to buy with a partner. The proportion of female-only mortgage applicants has risen from 36 per cent in 2020 to 41 per cent last year, according to the broker Mojo Mortgages.

The numbers show that more and more women would prefer to buy on their own terms than wait until they are coupled up.  ‘I need to support myself’ For Jess Pursey, 33, a customer operations manager, that resolve took root this spring when she bought a 40 per cent share of a new house at Dorchester Living’s Heyford Park development near Bicester, Oxfordshire. Her share cost £162,000 of the £405,000 full market value, and she put down a £16,200 deposit through the part-buy, part-rent shared-ownership scheme. She finally felt she had “space to breathe”, she says, and a garden for her cats, George and Winnie. “It’s challenging to buy a home on a single income,” she says, “but it’s all about adjusting your lifestyle. It was important for me to lay these foundations for the future because nothing in life is guaranteed. I might be single for the rest of my life, or I might be the breadwinner even if I did meet a partner.

Relationships and marriages don’t always work out, but that house will always be mine.” Pursey’s determination to buy alone was shaped by experience. “The house I bought with my ex-partner was in both our names, and we split the mortgage 50/50, but he paid the deposit and always said it was his house. You don’t forget things like that,” she says. After their split, she moved in with her father to save rather than rent, determined that the next time she bought, it would be on her own terms.  “There’s a lot of propaganda suggesting women should prioritize finding a partner over their careers,” she says. “But I refuse to settle, and in the meantime, I still need to support myself.

While I could live at home, at nearly 34 that wasn’t what I wanted for myself. “I prefer to budget monthly so I can return to a home filled with my belongings, a place I’m proud of. I may not have children, but I have pets to care for, and they help make my house a home.” ‘Owning a flat in London is a dream’ For Fionnuala Carr, 31, buying her own home was about finding stability after years spent navigating London’s volatile rental market.

Carr works as a data analyst in Canary Wharf, east London, and in March bought a two-bedroom, two bathroom flat at Springfield Place, a Barratt London development in Wandsworth, south London, for about £600,000. She saved £60,000 on her own over four years for her 10 per cent deposit. “Owning a flat in London is a dream, and I knew it would be a good investment,” she says. “You get better value for money in London than in Dublin.”

She had been renting with three other women in Balham, southwest London, her rent almost as high as her mortgage, but saw that many of her female friends were starting to buy on their own. This gave her the courage to approach a financial adviser to see whether she could do it too. “He said there was never a good time to buy, which scared me, but he also said there’s never a good time to sell either. If it’s right for you and you can afford it, go for it,” she says.

Not ready to live entirely on her own, she looked for a two-bedroom, two bathroom property so she could shelter a friend from the stormy rental market to help her pay for the mortgage. She says, “I’m not under pressure, wondering if the landlord will sell or if we’ll be asked to move. I can decorate as I want and choose who I live with. I remember a friend complaining about her housemates not putting out the bins, and I just can’t deal with that any more.” ‘

Shared ownership was my best option’ For Victoria Broomham, 32, affordability was the hurdle. When she and her partner separated, she sold their jointly owned house in Maidstone, Kent, for £272,000, using £15,000 of equity as a deposit to buy a 48 per cent share of a one-bedroom apartment at David Wilson Homes’ The Poppies development, also in Maidstone, in May this year. “I spoke to a mortgage adviser who told me it would be impossible for me to buy outright,” she says. “If I didn’t want to rent, shared ownership was my only option.”

She now pays £652 a month for mortgage and rent, plus about £140 on energy bills, and has stayed close to her job as a pharmacy technician at Maidstone Hospital. “It wasn’t like I was moving out on my own; I still had Buddy (her miniature dachshund) with me, so I’d have to find somewhere where I could rent with him,” she says, “but I wanted to stay on the property ladder if I could. “For the first time, everything is solely on me.

There are moments, like finding a really big spider, that make me wish I lived with someone else, but mostly I absolutely love it.” ‘I crave independence’ If Broomham’s story illustrates how shared ownership keeps women on the ladder, Georgia McGregor’s experience shows the persistence it takes to climb onto it.

The 29-year-old insurance underwriter is still searching for a one or two-bedroom flat in southwest London. She has lived with family to save and, with an inheritance from  her grandparents, has a larger budget than she expected. “I was surprised by how much I could borrow,” she says. “But it feels as if I’m being dismissed, with the assumption that I’m not a serious buyer.

Some [estate] agencies don’t seem to genuinely listen to my requirements.” She has been outbid on five properties and describes the process as demoralizing, yet remains undeterred. “Buying your own place gives you independence, and that’s what I’m craving,” she says. “I haven’t got a partner at the moment and I don’t want to wait. If I buy by myself, my security is on me and I’m not dependent on someone else for somewhere to live.”

McGregor has seen friends caught in break-ups that turned property into a battleground. “Some of my friends bought with partners and their relationships ended, which led to messy arguments over who gets what,” she says. “Others bought with friends, made clear agreements and now they’re using that equity to buy individually.”

She also plans to take a lodger for extra financial breathing space once she finds the right home. Fifty years ago, a single woman applying for a mortgage might have been asked for her husband’s permission or have been required to bring a male guarantor.

Today, lenders are actively courting female buyers, and developers are tailoring homes with second bedrooms suitable for lodgers, secure entry systems and shared amenities such as co-working spaces, residents’ lounges and gyms that appeal to solo occupants. Back on London’s Buckingham Street, the townhouse where Pankhurst made her stand has been modernized with a vaulted kitchen, marble bathrooms and a small terrace overlooking Whitehall Gardens.

Grant Bates, the selling agent, says the property’s history adds to its allure. “It’s a house of significance,” he says. “It was a place of activism, and now it’s ready for a new chapter.” A century ago, the suffragettes rallied under the slogan “Deeds, not words”. For this new generation of women, those deeds come with a mortgage offer attached.

Source: The Times