When it comes to the property rental sector, more of the work is done on paper and therefore it requires a lot of manual work. The process comprises a long chain of intermediaries and paperwork. This, in turn, makes the process time-consuming and tedious. Owing to manual paperwork most of the time, there remains the chance of errors. The sector mainly relies on archaic methods for doing business as well as keeping records.
Several advancements in technology, it has started to impact several industry verticals and reshape the process of globalization. With passing time, the Information technology sector is developing rapidly leading to increased innovation and more reliable technologies. Among various technology advancements, blockchain technology is gaining momentum increasingly. Several industry sectors have discovered a sheer amount of positive usability of blockchain in the space. In this blog, we will concentrate on the varied aspects of blockchain in rental sector.
The technology is evolving rapidly for different other factors comprising the rental jargon. For different sectors, it proves revolutionary and also resolves many existing glitches.
Let’s take a look at the different problems and challenges involved in rental.
Challenges & problems involved in rental sectors
Herein, we will take a look at the different problems involved in rental.
Distant issues
Investments in real estate need a good amount of capital. The rental sectors have many barriers such as credit score, high interests, citizenship, as well as financing.
No transparency in nature
The rental operation lacks transparency as there is complete dishonesty in this business. Additionally, several layers of corruption can be found. When it comes to rental sectors it is important to maintain a high degree of transparency which is needed to prevent fraud cases, money laundering and tax evasion.
No liquidity in nature
Liquidity can be defined as the way how rapidly an asset can be converted to cash. Real estate is a long-term and fixed investment. It becomes quite challenging to liquidate as a result of several challenges in the market. This leads to the high probability that a person who is willing to sell their property may not be a person who is looking to purchase.
Higher costs
In the rental ecosystem, the process involves a lot of intermediaries. This makes it expensive at each level with the inclusion of intermediaries at each stage. Several charges and fees are involved in the process like property transference fees, broker fees, investment fees, attorney fees, and other taxes.
Speed of transaction
However, it may sound easy that the transaction speed of real estate involves the conversion of one property to another. However, it consumes ample time in the process. If someone expects that they will search for a suitable property within a few months, then they should also acknowledge that it will take another six months to complete the paperwork as well as the payment process.
Pricing commitments
Different pricing commitments can have an adverse effect on the primary procedure of the rental sector. The financial investors must have heavy capital for investing in rentals. There are times when they have to opt for expensive financing options for retaining the detail.
The importance of blockchain in rentals
A blockchain can be delineated as a time-stamped series of immutable data. The data is stored in a decentralized ledger system that is quite accessible to all involved parties. The blockchain is capable of bringing different changes to the rental sector. The main usability involved within a blockchain ecosystem is smart contracts and tokenization.
Let’s take a glance at the various significance of blockchain in rentals.
Tokenization
A token is delineated as a digital representation of an asset, value and function present in the real world. Blockchain technology will assist in creating real-world tokens of the rental. The concept of tokenization not only increases the liquidity of assets but, it assists in trading the assets without involving any third party. The fractional ownership of property will get benefitted and this will save costs.
Smart contracts
Smart contracts are considered self-executing contracts. The automated contracts comprise a special system. The system involves special instructions written in codes that are executed as the conditions are fulfilled. Smart contracts will cut off the middleman and intermediaries. This assist in making the process cheaper as they cannot tamper and it will diminish the time consumed by paperwork in the entire process.
Financing & payment systems
As a result of extensive documentation needed and different intermediaries, the payment process becomes expensive, time-consuming as well as opaque. As the data is present on decentralized technology, it will become more secure documentation, transparent report and so forth. The verification process reduces the number of selected parties and makes it simpler for buyers and sellers.
Enhanced Financial Evaluation & Due Diligence
There are times when manual paperwork and verification processes can result in welcoming errors in the process. The digitization of the process will not only make it secure, and cheaper but also boost the due diligence process.
However, a blockchain system comes with some kind of limitations which cannot be denied. With technologies advancing, blockchain systems will also evolve with time.
Challenges of blockchain
Though there are several challenges in the blockchain system, their positive benefits outweigh the limitations.
With digitization, the existing system of more control by government organizations and financial institutions will get a revamp. This implies there would be less control over them.
Innumerable transactions happen in a day and blockchain technology is still advancing to store that much of transactions. Presently, it has less storage.
Due to emerging technology, blockchain needs to be fully comprehended by people regarding its application ad functionalities, The adoption and implementation of blockchain development services may take a long time.
Final Thought
After observing several aspects of the impact of blockchain technology in the rental sector, it can be stated that all the glitches and difficulties involved in rental verticals can be solved by blockchain technology. As the top Blockchain development company Nextbrain offers high-quality blockchain development solutions to startups, enterprises and businesses. The blockchain developers are well-versed with the blockchain systems and offer unique services to clients. Connect with our professionals to gather complete insights about blockchain development.
Saran
August 26, 2022 Author