The Australian conveyancing industry could benefit up to $89 million per annum with a fully digital lodgement and settlement process.
Australian property industry practitioners are missing out on substantial financial gains the longer it takes to fully transition to e-Conveyancing, according to a new Deloitte Access Economics report released today.
The independent Deloitte analysis estimates the Australian conveyancing industry will benefit to the tune of approximately $89 million per annum when a digitised lodgement and settlement process achieves 100 per cent uptake in 2021-22.
The report, which has modelled the potential benefits of a fully digitised system, found that the estimated benefit to practitioners in the 2016-17 financial year was $3 million, with two per cent of practitioner lodgements completed on the PEXA platform.
When costs are taken into account, the net benefit to practitioners was just under $200,000, but costs are predicted to fall substantially as practitioner uptake accelerates e-conveyancing’s ‘network effect’.
According to the study, the largest contributor to practitioners’ costs was duplication of work across paper and electronic processes. This occurs when one side of the transaction does not use the electronic system, meaning all parties have to revert to paper processing.
This duplication is resulting in mass inefficiencies and excessive transition costs for practitioners.
John O’Mahony, Partner, Deloitte Access Economics, said the new report highlighted the urgent need for the property industry to embrace digital disruption, to unlock the potential benefits of e-conveyancing for the entire economy:
“It’s clear from this report that those Land Registries that have created timelines to phase out paper-conveyancing should be acknowledged for their leadership. Until paper is removed from the property settlement process, the full efficiencies beholden to e-Conveyancing will be difficult to realise. If anything, I think the results indicate the transition to digital settlement would benefit from acceleration.”
The report also revealed e-conveyancing has reduced the frequency of delayed settlements, reducing a major source of stress for Australian consumers.
PEXA CEO Marcus Price said the industry is only now beginning to realise some of the intended efficiencies thanks to a spike in the number of financial institutions and practitioners using the system.
“If we look at the more recent figures, PEXA is now doing close to 20% of all practitioner land lodgement nationally which is a massive lift on the 2% reported so we’ll shortly start seeing the true benefits of
e-Conveyancing filter through.
It’s fairly categoric – those firms clinging to paper property settlements are holding the benefits back from the majority and ultimately, it’s the consumer that loses out. Ask the vendor if they’d rather cleared funds in their account nearly instantaneously rather than waiting three days for cheques to clear and the answer is ‘yes’. It’s time to see the benefits filter through.”
Mr O’Mahony agrees:
“My advice to the property industry is simple – embrace digitisation as quickly as possible and reap the efficiencies e-conveyancing platforms such as PEXA can bring,”