Rent payments should form part of credit scores to help struggling Generation Rent get on housing ladder, MPs say
The move has been backed by the Residential Landlords Association, who says it can help to give a more accurate assessment of whether tenants can afford to pay a mortgage
RENT PAYMENTS should be automatically used as part of credit scores to help struggling Generation Rent get a house, MPs have said.
The move has been backed by the Residential Landlords Association, who say it can help to give a more accurate assessment of how well they can pay.
If the law were to be changed, it would mean that young people with no credit history, or a poor score,
At the moment most places don't include renting in their credit score models - but Experian do run a free scheme which renters can use to send them information of whether you pay it on time.
The Rental Landlords Association’s Chairman, Alan Ward, said it was "absurd" rent payment is not routinely included.
He said: “Moving to such a scheme would help not just tenants, but also landlords by giving them a clearer sense of whether a prospective tenant has historically paid their rent in full and on time.”
The debate came to Parliament after an e-petition which argued the case gathered 147,000 signatures - forcing MPs to consider it.
It stated that "paying rent on time should be recognised as evidence that mortgage re-payments can be met".
The user said that they had paid over £70,000 in rent and still struggled to get on the housing ladder.
Tory MP Paul Scully told MPs that they should make sure first-time buyers "have every chance to get on the housing ladder".
"Let’s do all we can in supporting a new generation of homeowners," he added.
And the SNP’s Kirsty Blackman stressed: “just because you have got no credit score, it doesn’t mean you can’t afford to pay.”
Steve Burrows, managing director of LateRent and LandLord Secure, said it was "out of step" that it wasn't already included automatically in credit profiles.
"Clearly it’s time for the government to sit up and listen to this often-overlooked market, and stop simply paying lip service to their own housing policies," he added.
The Government have said that "lenders must consider a range of factors when assessing a mortgages application.
"Meeting rental payments is not sufficient in itself to demonstrate affordable over the lifetime of the loan."
Treasury minister Stephen Barclay said today that some lenders can use rent payments as a factor if they wish - and they can be a good predictor of credit risk.
“It is clear that many people still struggle to make the first step on the housing ladder," he admitted.
“Being able to access data on rental payments will benefit both the borrower, and it will also benefit the lender.”
He said he would look into ways to boost awareness of schemes like Experian for young people.
