Research consultancy 71point4, has partnered with the Centre for Affordable Housing Finance in Africa (CAHF) – a not-for-profit company with a vision for an enabled affordable housing finance system in countries throughout Africa – and Seso Global, to develop South Africa’s first blockchain-based property register. The pilot study area consists of almost 1,000 properties located in four sites in Makhaza, Khayelitsha. All the properties are Government-subsidized properties that have not yet been registered on Deeds Registry.
Daniel Bloch, the CEO of Seso Global, a blockchain property registry company, said this will be the first working example of a blockchain-based property registry in South Africa. Aside from creating an immutable record of who owns which house, the Seso platform facilitates and records transactions such as sales and transfers out of deceased estates and integrates with third parties who facilitate transactions, including mortgage lenders.
“For the time being, property owners will record these transactions at the Transaction Support Centre, a walk-in housing advice office created by CAHF and 71point4 located in the area. But over time, we will record transactions through the Seso app” he explained.
The benefit of the blockchain solution is that it allows the data to be stored in a decentralised, secure database that can be updated without any loss of historic data. This means there is a secure, back-to-back record of all transactions that is completely tamper-poof. Eventually the vision would be to integrate this record into the Deeds Registry when other impediments to transfer have been removed.
South Africa has a serious titling problem. According to Kecia Rust, the CEO of CAHF, the government has built over three million RDP houses since democracy. But CAHF’s analysis of deeds office data indicates that only 1.9 million of these properties have been registered. The National Department of Human Settlements, Water and Sanitation (NDHSWS) estimates that the title deed backlog for RDP properties built prior to 2014 currently stands at 511,752. These properties were given to beneficiaries, but no title deeds were registered and handed over. At the same time, there is a backlog of 351,470 title deeds on newer properties.
“To create a register of property owners we first had to go door to door to find out who lives in each property and to establish how they came to be there” says Illana Melzer, founder and lead consultant at 71point4.
Rust stated that his organisation will use Seso’s platform to manage other client service requests that come to the Transaction Support Centre from all over Cape Town.
“We hope the lessons we have learned will provide valuable evidence to inform the development of accessible, secure, affordable and efficient mechanisms to facilitate property market transactions. This is important across the market, but particularly in entry level segments of the market where existing mechanisms are simply too costly,” he said.
CAHF, Seso Global and 71point4 have a working agreement to extend this pilot into other areas and use cases.