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01/06/2017

Block capital: How blockchain could change planning

Blockchain: Shutterstock

Devised for the digital currency Bitcoin, Blockchain Technology has created the backbone of a new type of internet and its potential to publicly record everything of value holds opportunities for the planning community. Ronan O'Boyle of Urban Intelligence explains

Ledgers have forever been at the heart of commerce, most prolifically in the recording of money and property. So it’s not too much of a leap to imagine the new distributed ledger system, blockchain, as continuing to play a vital role as these sectors modernise.

There has been much speculation about how blockchain could contribute to a more efficient and less labour-intensive property industry. In whichever role it is put to work, the sequential and time-dependent nature of blockchain can assist in creating ‘next-to-live’ information feeds and an ever increasing archive of information on all aspects of the built environment.

When introduced to new technologies we are often too conditioned by existing frameworks to imagine how far reaching the implications could be. The UK development and planning system presents a similar obstruction, bringing with it the weight of its own legacy.

However, if we ignore these existing constraints – that we still work with paper documents or PDFs; that we rely on a frustratingly large and varied number of different sources of information – then we might be able to imagine a post-document world in which every ‘transaction’ becomes a chance to share a multitude of valuable data. Rather than being locked up in individual documents, it’s information that would be accessible and transparent yet also unalterable and verifiable.

"With each transaction we build up more and more comparables and real-time information"

In such a scenario, when ownership of a property changes hands the transaction would be instantly processed through the verification of all parties involved in an unalterable database. This transaction could contain digitised, traceable, accessible and transparent details of the asset in question – the price paid, former owner, new owner, floor area (and thus price per square metre), construction date, floor plan, number of rooms, room type, environmental performance certificate… the list can go on and on.

If we were thinking of collecting this information using today’s mindset, we might imagine a convoluted set of forms that get saved as PDFs into a private folder until the owner wishes to sell the asset. It is indeed difficult to think about this information being represented as anything other than black on white.


What is blockchain?

Blockchain technology was invented to create the peer-to-peer digital currency, Bitcoin, in 2008. It is an open, distributed database that maintains a continuously growing list (aka, ledger) of ordered records (called ‘blocks’).

These records/blocks are generally transactions between two parties. Each ‘block’ (or entry in the ledger) contains a timestamp and a link to a previous block (hence, chain). The data cannot be altered retroactively.

Each transaction, and hence timestamp, is created by the approval of a distributed peer-to-peer network of computers/servers – an encrypted consensus – allowing for autonomous management.

Transactions are thus recorded efficiently, in a verifiable and permanent way for all on the network to see – removing the need for a ‘middleman’/central authority/third-party.

The ledger itself can also be programmed to trigger transactions automatically, i.e. ‘On payment of gross sum, pay VAT to HMRC’.

Blockchain is thought of as the second generation of the internet – an internet of value, rather than of information alone.

A blockchain transaction can be used to record any exchange or interaction. Other current uses include identity management, voting, file storage, and energy management. Potential uses include issuing passports, collecting taxes, assuring the supply chain of goods, etc. It holds tremendous potential for a wide variety of industries, including property and urban planning. 


What if we could actually see this data?

Companies like software developers City Zenith, whose recently launched Smart World (“the all-in-one data platform for the built environment”) give us an idea of how powerful an interactive 3D city model, with embedded data, can be.

So, what if our example transaction above was the very first transaction after this particular blockchain system was ‘switched on’? What would a 3D model of the UK, populated by the information attained in blockchain transactions, look like? Initially it would be pretty empty – we would probably find a lone, ghostly volume, floating a few stories above the ground. But it wouldn’t take long. When a house down the street is sold, we’d have another volume (firmly on the ground this time). Then, more apartments are quickly sold nearby. These aren’t just hollow floating masses materialising to build a virtual environment – they’re a goldmine of data connected to an ever-growing network.

A good comparison would be with building information models (BIM).

In BIMs, each selection contains data about that part of the model. Selecting a wall would show the construction materials, possibly the phase of construction that it will be delivered in, the building regulations it meets, and so on.

Why should a property transaction be any different? It can contain any information that the system demands of it. And similarly, as with a BIM model that many users can collaborate on, conflicts are raised if all users on the network cannot verify the data.

"The world (or the technology that drives it) will not wait. We will soon be in a post-document world"

With each transaction we build up more and more comparables and real-time information that soon allows us to see trends developing across the entire construction market. This is an autonomous world, populated by the transactions in the blockchain, verified by the parties involved.

We would have a live indicator of price paid for each property type, in each location (so long, extortionate consultancy reports!). We would have up-to-the-minute indicators of sustained price growth in a location and/or property type (so long, speculation!).

Companies like Built-ID (formerly Industry Hub) are attempting to ‘digitise’ word-of-mouth by incorporating valuable data about the contributors to each property development. The property itself and all those involved in the development are linked. This information could be yet another data requirement for property transactions, whether they be planning applications, tenders, contracts or leases. If these were required to include information on suppliers in a blockchain system, they would be confirmed by all parties involved and automatically updated.


Blockchain examples in real estate/planning

Dubai: 

Smart Dubai recently announced that it wants Dubai to be “the first blockchain-powered government in the world by 2020”.

It is running a serious of workshops to educate the public and private sector so that pilot projects can begin later this year. The desired outcome is to make government services more efficient and help promote enterprise in Dubai.

This will be attempted through making all government documents on blockchain.

The Dubai government estimates that blockchain technology, could save 25.1 million hours of economic productivity each year, while reducing CO2 emissions.

Netherlands: 

As a result of market stakeholders expressing the need for a central transaction database, StiVAD, the foundation for real estate data, was founded in 2011. Cadastre (the Dutch land registry agency) and StiVAD have since signed an agreement to work on a register for real estate transactions.

Sweden: 

The Swedish National Land Survey and a blockchain start-up, ChromaWay, have recently finished a pilot project using blockchain and smart contract technology to model a property purchase with the aim of evaluating the potential from a legal, business and IT perspective.

What is noteworthy about each of these examples is that they come out of innovative, forward-thinking environments and are made at a national level. The impact of blockchain is indeed at the national level. This also points to the gravity of the embedded issues it could possibly address.


Back to reality

What would this take? Not as much effort as you might think. We only have to look to our ever-entrepreneurial colleagues in Sweden to realise that blockchain technology is manifesting itself in solid applications within the property industry.

"We will soon be in a post-document world and those not prepared to adapt, or not prepared to at least make the necessary decisions to adapt, will suffer from inferior efficiencies"

So the question is whether we are satisfied with continually retrofitting current systems to meet growing challenges, or instead can those with the authority be brave enough to start anew?

The world (or the technology that drives it) will not wait. We will soon be in a post-document world and those not prepared to adapt, or not prepared to at least make the necessary decisions to adapt, will suffer from inferior efficiencies. Here’s how blockchain can potentially revolutionise planning.

Planning

Blockchain’s perceived power lies in its ability to revolutionise the way governing authorities operate. So the most profound effect for the planning industry will likely manifest itself on the public sector side.

This is not necessarily something to fear in light of the massive resource challenges facing local planning authorities. In fact, as we believe at Urban Intelligence, emerging technologies will free people up to engage in value added tasks. (After all, did anybody actually get into this profession to endlessly trawl through PDFs?)

At each stage of the planning process there are steps that could be automated through the correct application of a blockchain system. The algorithmic technologies that enable the basic blockchain approach can be modified to incorporate rules, ‘smart contracts’, digital signatures and an array of other new tools. All of these elements allow for the digitisation and automation of standard processes that do not require the time or resources now diverted to them.

"At each stage of the planning process there are steps that could be automated through the correct application of a blockchain system"

For example, before purchasing a site the buyer could have a much more indicative picture of whether the site can attain planning permission by accessing a standardised database of policy relating to that particular site and development proposal. Crucially, this would also assist in financial feasibility assessments; the section 106, CIL and any other necessary contributions or alterations would be clearly visible from the outset (the payment procedure could also benefit from blockchain). Of course, planning permission in the UK will probably never be a tick-box scenario alone. But if the data on a development is structured in a way that it is readable, i.e. it knows it is in a flood risk zone, then a vast array of issues could be dealt with before the planning officer receives the application for approval (a Flood Risk Assessment will have satisfied this condition).

Approval

The advantage of using a distributed network like blockchain to approve a planning application is that all the appropriate agencies (and their data) could be consulted almost instantaneously and sequentially. National, regional, local, neighbourhood level authorities, as well as organisations like Historic England and the Environmental Agency, could all contribute to approving an application.

Consultation

The approval necessary by multiple actors ensures that the data will be transparent to all parties involved. This will go a long way to tackling issues of trust and information asymmetry that currently exist.

Plan making/Evidence bases

Individual plan policies and/or designated sites could be updated one by one (remember, no more documents!). I don’t think it is too far-fetched to imagine that policies could be directly linked to their relevant evidence base. As this updates, so does the policy. It is quite evident from these examples that many of the profession’s more mundane tasks could be replaced by this new technology. This is indeed exciting, but I am more excited about what a planner is in this new world. What would you do with this ‘free’ time and with all this knowledge at your fingertips? I hope you would feel empowered. And I hope our cities and communities would reap the benefits.

Concerns

As with all new technologies the logistics still need to be worked out. The impact of widescale blockchain implementation could be devastating for existing industry ‘middlemen’. Also, running a blockchain system could result in massive energy use; one estimate is that running it would take as much energy as running Denmark (energy requirements to run bitcoin are comparable to that of electricity use in Ireland).

"Who sets the standards that are necessary so that the system can roll out effectively?"

And there are regulatory issues. Who sets the standards that are necessary so that the system can roll out effectively? What are those standards? How do they differ from industry to industry? Again, this is inevitably a national/supranational concern and should be addressed as soon as possible.

Conclusion

Blockchain offers a world of instantaneous trustworthy interactions and thus system-wide change. But it will need swift and adequate buy-in from governing authorities to reap the benefits. This will only be possible with the assistance of private sector companies and dynamic public private partnerships.

It’s not enough for the profession to keep a watchful eye on these developments. We should all embrace and push for these changes. And if we do, this new technology won’t end careers; it will open up new opportunities for growth.

Ronan O'Boyle is director at property tech start-up Urban Intelligence

Image | Shutterstock


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