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8 MAY. 2019

Using blockchain to own a home

A Moscow-based proptech startup has developed an affordable model for shared home ownership based on a blockchain network of “dwellers”, smart contracts and accumulated equity.

Millions of city dwellers across the world are resigning themselves to a lifetime of rent, unable to get a foot on the housing ladder due to spiralling property prices.

Housing cooperative Doma is proposing a more sustainable alternative, based on the concept of shared ownership in a secure blockchain-powered network. Users – or “dwellers” – pay a monthly fee for equity shares in the network, instead of the physical asset, giving the stability of home ownership and the flexibility to move between different properties. Similar to a mortgage, as the equity increases, the fees gradually reduce over time.

Doma was set up by former students of Moscow’s Institute for Media, Architecture and Design. Its co-founder, architect Maksym Rokmaniko, explains: “We are building a community of people who understand that housing can be both an asset and a service. We want to reverse-engineer the system so that the user pays to live somewhere and generate equity without having to worry about saving up to buy an apartment. The most important factor is to reduce their spending.”

Berlin at night
A Doma pilot in Berlin involving local users already signed up to the network is slated to launch this summer

The platform is still in development, but the plan is to purchase housing units in urban areas that have experienced a dramatic growth in rental prices. A pilot on a property in either Berlin or Kiev, involving local users already signed up to the network, is slated to launch this summer.

In the absence of banks, conveyancers and mortgage agreements, the system would be powered by blockchain, using smart contracts to keep track of each user’s share of equity on the network. The decentralised system would provide every stakeholder with transparency of each transaction.

We want to reverse-engineer the system so that the user pays to live somewhere and generate equity without having to worry about saving up to buy an apartment. The most important factor is to reduce their spending.

Maksym Rokmaniko
Co-founder, Doma

Rokmaniko says: “The key benefit of using blockchain is the security of transactions, which are stored in a decentralised ledger that’s impossible to alter or override. As with traditional real estate, the equity transfer must be done via a trustworthy interface, and blockchain is one of the most secure methods.”

However, there are legal obstacles to overcome, as most cities are governed by laws that prevent the use of smart contracts to transfer property or shares – Berlin and Kiev are exceptions. And questions remain over the public’s willingness to engage with the concept – many people will be wary of a system they see as “intangible” and based on investments in a decentralised network.

“We have a community of supporters and an initial test case, the plan is to keep showing people precedents of it working in practice to build support in the longer term,” Rokmaniko concludes.

Three other blockchain-backed real estate initiatives

Gimme Shelter

A real estate application that enables buyers and sellers to do deals over a blockchain-based network promises to make purchasing a house as simple as touching your smartphone screen. Developed by New York-based ShelterZoom, the app runs on a Ethereum-based encrypted blockchain ledger that gives sellers, vendors and agents transparent online access to all offers and acceptances in real time. Property titles, mortgages, legal and home inspection documents can also be accessed via the platform. All documents are electronic and use a participant’s blockchain key as a signature.

Children playing in Nairobi, Kenya
The Kenyan government is looking to use blockchain on an affordable housing project

Crypto Kenya

The Kenyan government is looking to use blockchain on an affordable housing project to help manage funds and restore the trust of citizens wary of corruption related to land acquisition. Local news outlet the Star reports that the government wants to build 500,000 homes, using six billion Kenyan shillings a month (about $59,000) from the National Housing Funding, paid for by citizens who contribute 1.5% of their salaries, with match funding from their employers. Blockchain’s immutable ledger will prove ownership of the properties and allow data to be stored securely.  

Blockchain Bonds

Berkeley, California, is set to become the first municipality worldwide to apply blockchain to public finance. The city council has approved a pilot programme to use the technology to issue micro-bonds of $10 to $25 to raise funds for community projects, including affordable housing. The pilot launched at the end of 2018, focuses on raising money for a fire engine, which, if successful, could scale up to funding for affordable and homeless housing, or managing internet-of-things applications such as connected city vehicles and street lighting.

  • Stephen Cousins is an award-winning journalist specialising in the built environment.

This article originally appeared in the Coastal Issue of Modus (May 2019).