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Impacts of E-Conveyancing on the Conveyancing Industry

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Impacts of E-Conveyancing on the Conveyancing Industry Impacts of e-Conveyancing on the conveyancing industry May 2018 Proposal title goes here | Section title goes here 01 Impacts of e-Conveyancing on the conveyancing industry | Table of contents Table of contents Executive Summary 1 Glossary 3 1. Introduction 5 2. Current state of play in the industry 7 3. Benefits of current electronic system 20 4. Benefits of a 100% electronic system 28 5. Other impacts of an eletronic system 32 References 36 Appendix A - Data collection 37 Appendix B - Modelling methodology for current images 38 Limitations of our work 41 General use restriction 41 02 Impacts of e-Conveyancing on the conveyancing industry | Executive Summary Executive Summary The conveyancing industry is undergoing The estimated benefits to practitioners in e-Conveyancing allows a digital transformation with the national the 2016-17 financial year were $3 million, practitioners, financial roll-out of an electronic lodgement and with 2% of lodgements completed on settlement system. This system allows the platform. The industry take-up rate institutions, and practitioners, financial institutions, and affects the probability of a practitioner government bodies to government bodies to lodge documents being able to transact electronically.1 For and complete settlements electronically. example, if 30% of all practitioners have lodge documents and This is part of a broader digital the system and are willing to use it, the complete settlements transformation underway in the Australian probability of a transfer transaction being economy. completed electronically is less than 10% electronically. This is or one in every 10 transactions.2 This is part of a broader digital In 2008, the Council of Australian further reduced if a transaction is unable Governments (COAG) committed to to be conducted electronically due to the transformation underway creating a single, national e-Conveyancing required forms being unavailable. in the Australian economy. solution to the Australian property industry. In 2010, National e-Conveyancing While the new system is generating Development Limited, now known as benefits, the experiences of practitioners is Property Exchange Australia (PEXA), varied. Firstly, some practitioners are not was formed. PEXA has now rolled out its achieving time savings due to productivity electronic platform across New South losses from learning a new system. Wales, Victoria, Queensland, Western Secondly, even when practitioners are Australia, and South Australia. achieving these time savings, there is often the perception that time savings are not a Previous research into the implications real benefit. of electronic lodgement and settlement estimated there are significant benefits There are also costs to practitioners to stakeholders in the process, including under a digital lodgement and settlement practitioners. However, practitioners have system. In 2016-17, costs to practitioners indicated the industry is not achieving were estimated at $2.1 million including the estimated benefits under the current $0.7 million in transition costs. The largest system. contributor to this figure is duplication of work across the paper and electronic PEXA commissioned Deloitte Access processes. This occurs when one side of Economics (DAE) to undertake the transaction is not willing or able to use independent analysis of practitioner’s the electronic system, requiring all parties experience with the electronic system, to revert to the traditional paper process. and to model the potential benefits to the When these costs are taken into account, industry under a 100% digital lodgement the net benefit to practitioners in 2016-17 and settlement process. 1 Impacts of e-Conveyancing on the conveyancing industry | Executive Summary was just $0.2 million. This is consistent with the anecdotal evidence collected through consultations and more broadly in the in- dustry. Net benefits of around $0.2 million The industry is likely to experience in 2016-17 increased take-up of the electronic system in coming years as many state governments introduce compliance dates for various instruments. According to PEXA’s April data, take up the system has already increased since 2016-17, especially for transfer transactions in Victoria (27%), New South Wales (20%), and Western Australia (17%). The introduction of compliance 2% take-up of the dates in other international jurisdictions, electronic platform such as New Zealand, resulted in improved in 2016-17 uptake and increased satisfaction with the electronic conveyancing process. Practitioners will benefit from increased take-up of the electronic system, with the industry likely to realise around $89 million per annum in net benefits from a 100% digital lodgement and settlement process in 2021-22.3 This figure is higher than Transition costs previous research due to the expanded of $0.7 million in scope of transactions, with the industry 2016-17 focussed on reaching a 100% digital process.4,5 The electronic lodgement and settlement platform also provides benefits to stakeholders outside of practitioners, such as consumers and government bodies. For example, our consultations $89 million with practitioners found that electronic potential benefits platform has, on average, reduced the to conveyancing frequency of delayed settlements. Just as industry in 2021-22 with practitioners, the potential benefits to stakeholders in the conveyancing process will not be fully realised until the industry reaches 100%. 1 This refers to the share of instruments lodged on the electronic platform for NSW, VIC, WA, QLD and SA only 2 30% is an estimate of the current take up using actual electronic transaction data in 2016-17 and an estimate of the current industry size. 3 This assumes a 100% digital lodgement and settlement process is reached by 2021-22 in NSW, QLD, WA, QLD, and SA. 4 PwC (2010) and PwC (2015) 5 Previous studies only considered electronic lodgement and settlement for the five main instruments, which accounted for around 80% of total transactions. 2 Impacts of e-Conveyancing on the conveyancing industry | Glossary Glossary Acronym Full name ACT Australian Capital Territory ARNECC Australian Registrars’ National Electronic Conveyancing Council BCR Benefit Cost Ratio CAF Client Authorisation Form CBA Cost Benefit Analysis CAGR Compound Annual Growth Rate COAG Council of Australian Governments DvP Delivery vs Payment ELN Electronic Lodgement Network ELNO Electronic Lodgement Network Operator NSW New South Wales NT Northern Territory OECD Organisation for Economic Co-operation and Development PEXA Property Exchange Australia PwC PricewaterhouseCoopers QLD Queensland SA South Australia VIC Victoria VOI Verification of Identity WA Western Australia 3 Electronic settlement and lodgement for conveyancing | Glossary 4 Impacts of e-Conveyancing on the conveyancing industry | Introduction 1. Introduction The conveyancing industry is currently Growth in electronic lodgement and currently deployed. These states include undergoing a digital transformation as settlement is expected to increase sharply New South Wales (NSW), Victoria (VIC), players in the industry seek out efficiency in the next couple of years due to the Western Australia (WA), Queensland gains through the use of technology. required use of the electronic platform (QLD), and South Australia (SA). This report Property Exchange Australia’s (PEXA’s) for various transactions in Western excludes analysis on regulatory changes, electronic platform enables lodgement Australia, New South Wales, Victoria, and potential implications to the structure and settlement activities to be performed South Australia. There are concerns in the of the industry, and implications for digitally. This provides a number of conveyancing industry that the benefits of government policy. benefits to parties involved in a property electronic lodgement and settlement are transaction, including a reduction not being realised by practitioners, and this Our modelling found that the industry in manual activities and increased has implications for the industry under a likely achieved around $0.2 million in transparency. 100% digital system. net benefits in 2016-17. Approximately $3 million in benefits were offset by $2.1 The Council of Australian Governments PEXA commissioned Deloitte Access million in costs, including $0.7 million in (COAG) recognised the potential efficiency Economics (DAE) to undertake analysis of transition costs. We estimate that the net- benefits of an electronic lodgement and current and potential future benefits of benefits to the conveyancing industry will settlement system, introducing electronic electronic lodgement and settlement to the increase to around $89 million per annum conveyancing as part of the Seamless conveyancing industry. under a 100% digital lodgement and National Economy deregulation priorities settlement process in 2021-22. in 2008. National e-Conveyancing This report provides independent analysis Development Limited (now known as PEXA) of the implications of the digital transition The rest of this chapter outlines the was created in 2010 to deliver a single, for practitioners, including experiences approach undertaken for this analysis and national electronic conveyancing solution of practitioners to date and under a likely the structure of the report. to the Australian property industry. future where 100% of transactions are conducted electronically. The analysis 1.1 Approach Despite the potential benefits from is focused on understanding the electronic
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