Property and Cryptocurrency: A Possibility?

Thanks to the stamp duty holiday, low interest rates, lockdowns and other factors, the property market has become rather saturated of late. There has been a lot of speculation circulating as to what the future holds for property and how we can expect the market to look in the not-too-distant future. 

But property hasn’t been the only hot topic in the news and media recently – there's been some exciting activity happening surrounding cryptocurrency, with talks of it becoming regulated a possibility.  

So, will cryptocurrency soon become a viable method of buying and investing in property? Let’s take a look at what’s been happening... 

The world’s first country to legalise Bitcoin  

Whilst there might not be an overnight switch to buying property using Bitcoin, advancements have certainly been taking place. On 9th June 2021, the BBC reported that El Salvador became the first country in the world to officially legalise Bitcoin and classify it as a currency. For Salvadoreans, Bitcoin will soon become a legal tender, meaning that businesses must accept it by law as payment for goods and services, in addition to the US dollar.  

One of the factors considered when legalising the virtual asset, was that the country’s economy relies heavily upon money being sent home from abroad by ex-pat Salvadoreans. Could the news cause other countries to consider cryptocurrency as a viable option? 

Cryptocurrency has already been a hot topic of conversation for a while, and this has added to that; with talks of Paraguay following suit by preparing to make Bitcoin legal tender.  

Could crypto be the new way to invest in property? 

With speculations of Paraguay becoming the second country to legalise Bitcoin continuing to circle, other conversations are developing regarding what role cryptocurrency might play in the property market. 

Following El Salvador’s recent announcement, excitement is brewing amongst investors and those involved in property. But how likely is it that Bitcoin can be used to buy property in the UK, or as a deposit for mortgages? 

Although Bitcoin is still a relatively new concept to many, and one that can be difficult to wrap your head around, banks and mortgage lenders are already discussing the possibility of using cryptocurrency to buy property. 

You might be surprised to hear that some mortgages lenders in the UK are already accepting Bitcoin as a means of deposit payment. Nationwide Building Society are one example of a lender accepting cryptocurrency as a source of funds for a mortgage deposit. Nationwide’s website states that deposits from crypto assets will be considered on a ‘case by case basis’. 

What about estate agents and property services? 

It has been rumoured that estate agents are becoming more and more open to accepting payments by cryptocurrency from landlords, vendors and tenants. Although we don’t see an immediate acceptance of cryptocurrency by agents in the UK, it is quite possible that an increasing number of them will begin to accept payment by Bitcoin. 

Why cryptocurrency?  

Whilst many are sceptical about crypto, the virtual coins – which are held and distributed via a decentralised ledger – have a significant advantage over traditional types of legal tender. One advantage of cryptocurrency is that it is practically impossible to counterfeit. And, although you may have heard of Bitcoin by now, there are in fact a few thousand different cryptocurrencies available! 

But what part Bitcoin will play, if any, in the property buying process remains to be seen. Due to money laundering checks being such a large part of the mortgage process, the lack of regulation surrounding Bitcoin might be a stumbling block. 

With the exception of some lenders such as Nationwide, it is likely that most mortgage lenders will be followers, as opposed to leaders, when it comes to being widely accepting of cryptocurrency. 

Although buying property with Bitcoin seems like a long way off just yet, the relationship between cryptocurrency and house buying is sure to evolve in one way or the other, over the course of the next few years. 

Whether or not buying property with crypto will become a possibility isn’t yet clear. Having said that, what was once considered to be highly volatile, now looks like it’s here to stay.  

Will Bitcoin become the normality for property purchases and mortgage payments? Time will tell.