Buying a House with Bitcoin
Bitcoin’s increasing acceptance and escalating value has given people worldwide the unprecedented opportunity to use their coins to buy property, especially those who took the chance when it was at its lowest value.
The popularity of cryptocurrencies such as Bitcoin, Ethereum and Litecoin has shot up in recent months, with 1 Bitcoin being valued at around £5,447 at present. Over 9 years, Bitcoin’s value has fluctuated drastically, dropping and rising significantly in the matter of minutes, making many people who doubted its legitimacy wish they had invested back in 2009.
A house in Essex was bought entirely with Bitcoin in December 2017, making history as the first ever property purchased using cryptocurrency in the UK. The sale cost the buyer just 63 coins which is the equivalent of £350,000.
House removal experts, Compare My Move will look at the role Bitcoin has and continues to have in the property industry, the estate agents who are accepting Bitcoin, the advantages and disadvantages of using cryptocurrency to purchase a house, and the future of buying a house with Bitcoin in the UK.
What is Bitcoin?
Simply, Bitcoin is a form of cryptocurrency that’s decentralised, which means it doesn’t belong to the government or any bank. Bitcoin’s popularity comes from its high value and the ability to send money anonymously, quickly and often without any fees.
Although Bitcoin is highly volatile with its value set at £2,727 in September 2017, £14,380 just 3 months later in December and then plummeting back down to £7,836 only a month later in January, the risk has paid off for some people. If you invested £30 in Bitcoin back in 2010, then today you’d be a millionaire.
If you're not very familiar with Bitcoin, we've highlighted some facts you should know about the cryptocurrency.
Buying a House with Bitcoin Timeline
Buying a house with Bitcoin in the UK has been done before, and the demand from young buyers for sellers to accept cryptocurrency as payment is rapidly increasing. We’ve put together a timeline to show the increasing popularity and the “firsts” of using cryptocurrency in the property buying industry.
JAN 2009 – Bitcoin was founded in 2009 by “Satoshi Nakamoto”, whose identity remains anonymous. Bitcoin was worth practically nothing up until March 2010, where it had a value of £0.002/3$0.003.
2012 – BTCJam was created to loan people Bitcoin as a way to improve their credit score, essentially helping people have a better chance of getting a loan, deposit and buying a house.
NOV 2013 – The value of Bitcoin reached a high of £952/$1,242.
2013 – International Blockchain Real Estate Association (IBREA) was set up to encourage people to pay via blockchain in the property industry.
2013 – In 2013, Bitcoin Real Estate was founded. A Canadian website specialising in buying and selling property worldwide using cryptocurrency, with the main forms being Bitcoin, Ethereum and Litecoin.
AUG 2017 – Agape Properties become the first UK letting agents to accept Bitcoin as a payment on property and even for rent. The company is based in Croydon, London.
SEPT 2017 – The first ever house was bought with Ethereum in Kiev, Ukraine for the equivalent of £46,000/$60,000.
SEPT 2017 – Property developer, The Collective, became the first to accept Bitcoin for rent deposits in the UK.
OCT 2017 – A mansion in Notting Hill, London, was up for sale for £17 million only accepting the cryptocurrencies Bitcoin and Ethereum. The house is still on the market.
DEC 2017 – The first ever house was sold in the UK where the buyers paid entirely with Bitcoin. Property Developer Go Homes sold two houses worth £350,000 and £595,000. This was the first time the Land Registry had given permission to record a Bitcoin sale.
FEB 2018 - Michael Komaransky makes history by selling his house for the highest ever Bitcoin to Bitcoin transaction at 455 coins.
Do Estate Agents Accept Bitcoin?
Many estate agents and sellers are extremely wary of accepting any form of cryptocurrency due to its unpredictability and lack of protection. However, the number of UK and US estate agents willing to take Bitcoin as payment is slowly on the rise.
After the first successful sale of a UK property using only Bitcoin, Go Homes announced it’ll accept the digital currency to buy any of their other 250 homes available. The Land Registry also made history by agreeing to record the sale of the property in Bitcoin value for the first time.
We’ve put together a list of the more popular estate agents and websites that accept Bitcoin or have certain listings that will accept Bitcoin.
UK & Northern Ireland
- The Collective
- Go Homes
- Agape Properties
- Hagan Homes
- Munday’s Estate Agents
US & Canada
- Magnum Real Estate Group
- Sand Key Realty
- Kuper Sotheby's International Realty
- Open Listings
- Bitcoin Real Estate
How to Buy a House with Bitcoin
There's two ways you can buy a house with Bitcoin. First, if a seller is not willing to accept cryptocurrency as payment, then you can exchange or sell your Bitcoins for cash with a third party website. Second, if the seller is willing to accept entirely Bitcoin, you’ll just need to make an agreement on the final price and figure out how to pay any fees and companies that won’t accept the digital currency.
Property Developer AGAPE Properties became the first to start accepting Bitcoin as a form of payment on their houses in 2017. However, they told Compare My Move they’ve still not had any Bitcoin sales as there’s no Bitcoin mortgages available at the moment. Therefore, you'll need to pay the full asking price of the house upfront in Bitcoins or cash.
Many banks have announced that they won’t accept money that’s come from Bitcoin or any other cryptocurrencies as they are unregulated. Bitcoin transactions can’t be traced, along with the fact it’s often associated with money laundering, makes it impossible to get a mortgage.
Coventry Building Society, Skipton and the Yorkshire Building Society have all announced that they will accept money deposits that has come from Bitcoin earnings. However, Santander, Nationwide and Aldermore will not accept deposits that have come from Bitcoin.
Advantages of Buying a House with Bitcoin
If you have the opportunity to buy a house with Bitcoin but unsure whether to go ahead with it, then you'll want to find out the benefits. Buying a house using Bitcoin comes with many advantages and we've listed the main points below.
- Buying a house with Bitcoin cuts out the middle man, which speeds up the process of buying a house for both the buyer and seller.
- Bitcoin doesn’t belong to a bank or any other institution, therefore people can remain anonymous when purchasing property, which has proved to be popular amongst Bitcoin buyers.
- The fees you’d typically pay with a credit or debit card will be lower when buying a house with Bitcoin or in some cases won’t be relevant at all.
- The majority of sellers accepting Bitcoin will offer a good discount for those who will pay in the cryptocurrency.
- You will have more of a chance of securing the property as some sellers will only accept cryptocurrency as payment.
Disadvantages of Buying a House with Bitcoin
There's an obvious risk when buying a house with Bitcoin due to its ever changing value. We've compiled some disadvantages to make you aware of the risks.
- The volatility of Bitcoin’s value means it's highly unpredictable. Its value is known to increase or decrease significantly within seconds, making it harder to agree on a sale price.
- The people who can afford to buy houses via Bitcoin are mainly “Bitcoin miners”, who invested before its popularity rose, so only a select few would be able to have enough to buy a house.
- It’s hard to sort out insurance, estate agent fees and stamp duty with Bitcoin, making the process of buying a house more difficult.
- Bitcoin isn’t protected by a UK regulatory protection scheme, meaning you’ll have no back up if you get hacked or the value goes to pot.
- Due to Bitcoin’s anonymity, it’s commonly used to carry out drug deals and money laundering, which puts many estate agents and sellers off the idea of accepting Bitcoin as they don’t trust that it’s legitimate money.
The Future of Bitcoin in the Property Market
Bitcoin’s popularity in the property market is forever increasing, with it slowly becoming accepted by many estate agents worldwide as a form of payment for a house, whether it’s buying or renting. Although the use of Bitcoin and other cryptocurrencies has many sceptics, many people believe that this is just the beginning.
The majority of interest in buying property with Bitcoin has come from mainly a young, Asian demographic who’ve made a fortune in Bitcoin, according to one London seller. With the rise of bitcoin’s value and popularity, many people who invested in the digital currency when it first came out will now have the unprecedented opportunity to buy a house with Bitcoin.
On the future of using Bitcoin in the property market, Go Homes director Ed Casson says how although early adopters have used Bitcoins within the traditional property system, he predicts the blockchain may change the system completely.
He says: “We are pioneering blockchain technology to speed up the purchase of homes, to essentially click to purchase speeds rather than the age-old archaic system currently employed to buy and sell property.”
He believes such technology “will make property far more liquid in future and will also enable fractional ownership of homes through smart contracts”.
However, the future of investing in Bitcoin is uncertain. If Bitcoin was to become a real, every day and widely accepted currency, it would need a stable and reliable set value otherwise it would be impossible to set prices for every day items.