Over 11 million people in the UK, which is equivalent to 40% of households, live in rented accommodation – and this number is growing (according to the Creditworthiness Assessment Bill research).
Rent is typically paid in advance and is usually the biggest single expenditure of a tenant.
For the vast majority, rental payments aren’t recorded in the same way that mortgage payments are and aren’t used to assess affordability or credit worthiness. This means there is a deeply uneven playing field when it comes to the availability and affordability of credit with tenants suffering a worse deal due to this absence of positive data.
This is what the Creditworthiness Assessment Bill seeks to address.
The Creditworthiness Assessment Bill will require that the Financial Conduct Authority ensures credit providers, including mortgage providers, take into account (a) rental payment history and (b) council tax payment history when assessing a borrower’s creditworthiness.
This is about fairness, ‘a hand up’ and financial inclusion – helping (potentially) millions more people get a foot on the ladder, and into better lives.
Earlier this year, we wrote about a petition to make rental payments sufficient proof of ability meet mortgage repayments, https://www.paidandco.com/single-post/2017/03/03/Make-paying-rent-enough-proof-that-you-are-able-meet-mortgage-repayments. A mortgage company cannot use consistent rent payments as the only indicator whether someone can afford a mortgage or not. But we believe rent payments should be part of the affordability and credit risk assessment.
Here at PAID & CO, rental payment history is not our sole purpose but we deeply believe in the fairness of it. A tenant’s rental payment history should be considered as an essential part of their credit data, helping to level up that deeply uneven playing field.