Electronic Property Documents - What the future holds

The Electronic Communications Act finally completed its passage through Parliament on 25 May 2000. The section of the Act making valid electronic signatures came into force on 25th July 2000. We are waiting for details of when the remaining provisions of the Act will come into force.

Why is this relevant to the property industry?

The answer is that the Lord Chancellor will (once Section 8 of the Act is in force) have an opportunity to decide whether commonly used property documents (including contracts for sale, mortgages and leases) can in the future be created electronically rather than being "in writing" or "deeds" as currently required.

The Lord Chancellor has already indicated on a number of occasions that he is considering exercising his discretion. His focus remains on the residential property sector with the aim to try and promote the speeding up of the sale of residential properties. However, the commercial property sector should also welcome any proposals which help to make the property market more liquid.

The Lord Chancellor's office has now announced that he is likely to be issuing a consultation paper to obtain the property industry's views on whether electronically created documents should be permitted by, at the latest, December this year. This seems likely to be followed by legislation in 2002/2003. It is anticipated that the initial proposals will be aimed particularly at contracts for sale and mortgages since stamp duty is not normally payable on these types of documents (the Inland Revenue has yet to resolve how it will deal with the stamping of electronically created property documents).

Electronically created property documents are simply the first stage in what will, without doubt, be a radical transformation of the way property transactions are conducted over the next 5-10 years. Moves are already afoot towards a National Land Information Service where at the touch of a button it will be possible to obtain information in relation to specific properties (e.g. local search and Land Registry information) and automated land registration (where electronically created transfers will be instantaneously created and registered at HM Land Registry).

For further information please contact Mark Heighton at [email protected] or on +44 (0) 20 7367 2177.