What are Electronic Signatures?

UK Housing Market

In 2020, the UK government introduced a significant new service that had an influential impact on the UK property market by allowing, for the first time, deeds to be registered that were signed with electronic signatures. Since this was the first time non-mortgage deeds signed using electronic signatures could be recorded by HM Land Registry, the government noted the progress being made to fulfil practise guide 8 section 13’s standards by signature platforms and technology companies.

The pandemic and resultant lockdowns expedited moves to allow more use of digital signatures to facilitate smooth transitions in the property market. These electronic signatures go along with and support the digital mortgages that came out in 2018. Sign your mortgage deed, which facilitated homeowners to quickly remortgage in 2020 as the pandemic got underway.

The Sign your mortgage deed was introduced as a quick and simple way to remortgage deeds online and reduce the amount of paperwork and time needed for remortgaging. Automating the registration procedure for about 20% of applications submitted to the service was one improvement made since its introduction. Each deed was previously reviewed by a caseworker before it could be submitted. A few seconds after the application has been submitted, the register will be able to update itself and show that it has changed.

Post lockdowns: the continued growth of electronic signatures

It goes without saying that the benefit of the ease and convenience of signing deeds without resorting to copious paperwork or attending an office in person, during the pandemic, was very clear. However, even after lockdowns, electronic signatures “have a larger role to play in the future of land registration,” the government said. It has been said that electronic signatures in the UK property market are good because:

Electronic signatures can offer greater assurance and security than a wet signature on a paper deed, as well as offering cost efficiencies and environmental benefits.
They are the keys to unlocking the future of digital conveyancing.
Electronic signatures can be machine read, meaning they can feed into new automated processes more easily.
Their security features can also be validated digitally, again removing the need for manual checks or reviews, and offering greater assurance.
In some cases, they also offer verification of a signer’s identity.

Jamie Johnson, CEO of FJP Investment, noted that, “Electronic signatures are envisioned as a natural progression and compliment to the digitally produced deeds and digitally validated identity check. Taken all together, they allow for a much more streamlined application and registration process. This can only be a win-win for the UK housing market and for homebuyers. ”

The UK is considering electronic qualified signatures

Notwithstanding electronic signatures represent a significant step in the right direction in streamlining the UK housing market, they still have limitations and are unable to alter the entire process. While it’s true that they mean that documents no longer have to be physically posted and allow for documents to be signed very quickly, when electronic signatures are used with deeds, they will still need to be witnessed.

Well, there’s some good news here, too! A new and more sophisticated kind of electronic signature is on the horizon that is set to revolutionise how things are done.

In 2020, the government sounded out as a potential solution to the need for witnessing of signatures with an innovative kind of electronic signature known as a “qualified electronic signature.” S91 of the Land Registration Act 2002 allows an electronic signature of this kind to be used for documents that work like deeds, but as they are not deeds, they can be signed without the presence of a witness.

How does this work?

When a qualified electronic signature is used for signing a document, the identity of the signee can simply be confirmed by a “qualified trust service provider.” This verification from a service provider would be used in place of a witness and would be required to meet stringent standards set out in the eIDAS legislation.

In terms of where we are in terms of adopting the qualified electronic signature, the government stated in August 2021:

“We have continued to explore this solution and made excellent progress in understanding what criteria might need to be met for HM Land Registry to be able to accept them. We have also identified areas that require development if qualified electronic signatures are to become a practical solution for conveyancers and their clients.

“Crucially, we want providers to make the identity verification process as easy as possible, and to offer products that meet the needs of conveyancers and their clients, whether a single signature is being used for a one-off transfer, or they are dealing with a multi-use signature for a commercial user signing multiple documents a day.”

The first UK eIDAS qualified trust service provider has already been approved by the government in July 2021, signalling that the process of introducing this new type of electronic signing is well under way.

The government is in the process of trialling this new type of signature with a limited number of companies so they can see how it will play out in practice. They hope to learn what benefits it will give and any difficulties it will face before they can issue a “wider publication of our draft practice.”

In the meantime, you can learn more about qualified electronic signatures and how they differ from witnessed electronic signatures by watching this HM Land Registry video explainer.