The Residential Landlords Association (RLA) is now calling on the government to include rent payments to make up a significant part of the overall assessment of an individual’s credit score.
The RLA surveyed close to 3,000 landlords and found that 61% of them would support such a development.
Currently rent payment history does not form part of credit rating agencies’ calculation of credit scores, according to figures calculated by the best credit repair companies. With the current policy it can be difficult for tenants to gain access to a mortgage, even if their rent payment history is immaculate.
It has also been argued that taking rent payments into account would help landlords by giving a more correct estimate of the likelihood of a tenant paying credit back.
Absurd exclusion
“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,” said Alan Ward, Chairman of the RLA.
“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,” he added.
The Treasury rejected an appeal to use rent to prove mortgage affordability in March this year, as previously reported by Mortgage Solutions.
The statement followed a petition on the Parliament website by 27-year-old Jamie Pogson, which received nearly 150,000 backers. It called for rent payments to be enough proof that a prospective borrower was able to meet mortgage repayments.
FCA backed
In rejecting the proposal the Treasury backed the stance taken by the Financial Conduct Authority (FCA) in requiring lenders to take a wider measure of mortgage affordability.
A wide range of factors needed to be considered, said the Treasury, including household expenditure, loans and quality of living costs.
“These [regulations] were aimed at addressing the problems previously caused by poor quality mortgage lending, such as borrowers falling into payment difficulty and, ultimately, losing their home,” it said.
Despite the government’s negative response to the petition, MPs will still debate the issue as it reached more than 100,000 signatures. A date has yet to be scheduled for the debate.
