Rent payments should be used as part of credit scores to help private renters secure a mortgage to buy a home of their own, MPs have said.
MPs took part in a debate yesterday over whether rent payments should be taken into account when private renters apply for a mortgage to buy their own property.
The debate took place at Westminster Hall after a petition on the issue raised by Plymouth construction worker Jamie Pogson attracted 147,307 signatures, which is significantly more than the 100,000 needed to force a debate in parliament.
Credit rating agencies do not currently routinely include rent payment history when calculating credit scores. This means a tenant can find it difficult to access a mortgage, even if they have a long history of rent being paid in full and on time.
However, a recent survey of almost 3,000 buy-to-let landlords carried out by the Residential Landlords Association (RLA) found that 61% of landlords would support rental payments being added to tenants’ credit histories in the same way mortgage payments are.
The RLA believes that including rent payment in this way would also make it easier for landlords to make a more accurate assessment of a prospective tenant’s credit and rent payment history.
The RLA’s chairman, Alan Ward, commented: “With many tenants wanting to buy a house of their own, it is absurd rent payment is not routinely included when undertaking credit checks for mortgage applications.
“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.”
Steve Burrows, managing director of LateRent and Landlord Secure, a company which already offers a free service allowing landlords to report payment history to credit reference agencies so tenants who pay on time can build up a good credit history, also believes that rent payments should be included when calculating credit scores to support tenants wanting to buy a home of their own.
He said: “It is no secret that owning a property has become a distant prospect for many and the private rental sector continues to grow as a result. It’s therefore oddly out of step that tenants are unable to utilise rental payments as part of their credit profile – particularly as the government increasingly seeks to promote homeownership across the UK.
“We know this has been a rising frustration amongst renters for many years, which is why we launched LateRent – a free service which allows landlords to report payment history to credit reference agencies so tenants who pay on time can build up a good credit history. It has been hugely welcomed by tenants and landlords alike, showing the importance of yesterday’s debate.
“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.”