A property consultancy claims to be the first to sell a plot of land through an NFT.
Selling the land as an NFT is believed to circumvent the usual conveyancing process associated with land and property sales as the digital asset links ownership of the physical item rather than transferring ownership.
The land is a beach-front plot in Milford-on-Sea in Lymington, Hampshire, and is listed with a minimum bidding price of £1.25m in cryptocurrency. It is on sale until late October and sold without planning permission.
Idris Anjary, founder of West London City Lets and Tokenized Properties who are selling the land, said: “NFTs being paired with physical assets is becoming increasingly popular within the crypto-sphere.
“We truly believe that this is the future of property transactions and are delighted to be embarking on this as our next adventure.”
What is an NFT?
NFT stands for ‘non-fungible token’ and is, broadly, a digital asset that links ownership to physical or digital items, such as a work of art, real estate, music, video, or even a social media tweet. They use blockchain technology for security in a similar way to cryptocurrencies.
However there is a stark difference between the two. Other cryptocurrencies are "fungible", which means the item it represents is interchangeable, whereas NFTs are "non-fungible" meaning it is permanently linked to the item it represents.
Is buying land through NFTs safe?
Without it ever having been done before, this is difficult to know. For this reason, it is also difficult to assess the credibility of any of the companies associated with these kinds of transactions either.
While selling as an NFT will possibly streamline a land sale and potentially speed up the process, it is not clear whether circumventing the usual administrative conveyancing process will protect buyers and sellers from fraudulent transactions.
In theory, NFTs are considered a safer bet than other "fungible" cryptocurrencies when it comes to fraud, due to being formally registered on a blockchain. A blockchain is the digital name for a formal record of a transaction.
How will the NFT transaction work?
The land sale will be recorded by a company called Mattereum, which claims to be a secure public storage platform that organises the legal rights and guarantees of NFTs.
While much of the administrative process will be avoided for the land sale, Tokenized Properties, the digital estate agent selling the land, claims searches, title deeds and reference media will be carried out and displayed in the sale documents.
Mattereum founder and CEO Vinay Gupta explains: “Real estate is the biggest asset class in the world, and one of the most stable, particularly in geographically diverse portfolios.
“But the transaction costs are extraordinarily high, both in terms of diligence on the buildings and the mechanics of legal transfer of title.
“Innovation in the space to make buying and selling real estate cheaper and easier is going to liberate a lot of dormant potential in the sector.”
The purchase includes a sea-facing plot of land of approximate area of 2,680m2. The NFT will represent the land and the contract and is not connected to any planning application. Bidding closes on 26 October.
Given the absence of any planning permission, it is unclear why such a high sale value of £1.2 million in cryptocurrency has been given to it.
