As confirmed by a Government spokesperson, it is being envisioned that the onus to register the rental agreement between the landlord and the tenant would be on the former, likely online, while Government would then proceed to register that agreement onto a blockchain platform.
The new system is set to come into force in January 2020 and is currently at committee stage in Parliament.
On the implications of using a blockchain-based registry for rental contracts, Parliamentary Secretary for Social Accommodation, Roderick Galdes, who spearheaded the rental reform proposals, says “simply put, the system offers more protection and peace of mind to both lessor and lessee.”
Parliamentary Secretary for Social Accommodation Roderick Galdes
He explains that using a blockchain-based register will provide an “immutable,” or tamper-proof, “record of a rental agreement and associated contract terms.” Due to the inherent nature of DLT, he adds that such a system would be “tamper-resistant,” staving off any issues surrounding the authenticity of a document.
Mr Galdes adds “the system is public, and therefore transparent,” however, “access or authorisation is required to view the data,” striking a balance between the public’s right to accurate and timely information, and individual privacy.
He says that the adoption of smart contracts, a form of self-executing code running on the DLT platform, “ensures the proper construction of an agreement and may be used to enforce certain conditions.”
CEO at Dhalia Real Estate Services Alan Grima
Alan Grima, CEO at Dhalia Real Estate Services, is in agreement that “the online registration of rental contracts should increase the level of transparency in the market,” and that “blockchain is primarily a distributed database which can practically ensure the consistency and immutability of such data.”
He agrees that the ability to implement smart contracts on the blockchain will allow for processes between landlords, tenants and the authorities to be executed in an automated way. Asked whether he believes the introduction of such a system is expected to have a significant impact on the profession of realtors, Mr Grima does not expect this to be the case as it primarily shifts the element of trust between the lessor, lessee and the authorities.
Managing Director at Engel & Völkers Sara Grech, Benjamin Tabone Grech, discusses the possibility and benefits of extending the blockchain-based property registry beyond rental contracts. While the subject has been discussed casually by authorities and experts, there has been no concrete announcement on such a move.
Mr Tabone Grech says that the greatest advantage of this extension would be a drastic improvement in the process of title-transfer when purchasing a property. As things stand today, a notary must be engaged to carry out research on the title of the property to be purchased, on the basis of the individual who currently owns it. The notary then proceeds to carry out checks of any hypothecs, debts and securities that the owner may have taken out on the property before drawing up the final deed for the title transfer.
Managing Director at Engel & Völkers Sara Grech
Benjamin Tabone Grech
Mr Tabone Grech explains that “because the hypothecs and the register of the title are on the owner of a property personally, the buyer is not able to verify if the title of that property on a particular piece of land, within a block, is clean.”
Turning to how blockchain technology can assist, he asserts that when all property contracts are registered on a blockchain platform, this would pave the way for all title documents and land registration to be plugged into the same platform. Mr Tabone Grech argues that if the entire Registry is digitised, “people looking to buy a property only need to have a notary check who the previous property owner was, because previous title documents are already checked against the Land Registry via both being registered on a blockchain platform.”
Mr Tabone Grech goes on to explain that in essence, “what this would do to our economy is speed up the time it takes to agree on a promise of sale, one of the first steps in purchasing a property.” He observes how currently, “it takes six months to reach the promise of sale stage (konvenju), but with this technology it could take just three weeks.”
This article initially appeared in the October edition of Blockchain Island.