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Parliament to debate rental payments and relationship to FTB mortgage affordability

by: Tim Chen
  • 23/10/2017
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Parliament to debate rental payments and relationship to FTB mortgage affordability
Following an online petition from a 27-year old, which gained over 147,000 signatures, MPs will debate in Westminster later today whether rent payments should be used as proof of mortgage affordability.

The petition was set up by Jamie Pogson from Plymouth, who demanded that the government “make paying rent enough proof that you are able to meet mortgage repayments.”

“Since living on my own I have paid £70,000+ in rent on time yet still struggle to get a mortgage,” he wrote.

“Unless you’re getting handouts, wealthy or in receipt of inheritance it’s almost impossible. I want paying rent on time to be recognised as evidence that mortgage re-payments can be met,” Pogson added.

Mortgage Solutions has previously reported that over one-third of first-time buyers require assistance from the “bank of Mum and Dad” in order to afford deposits — which comes amidst figures from the Office for National Statistics revealing how affordability has worsened in the last two decades.

According to consumer credit reporting agency Experian’s First Time Buyer Index, many renters are already paying a comparable monthly sum, if not more, in rent than what they could expect to pay on a mortgage.

The index also showed how it’s cheaper to make mortgage payments than paying rent in 41% of UK districts — with renters paying on average £204 more than those with a mortgage.

Jonathan Westley, managing director of consumer information services at Experian, said: “It’s right that lenders carefully consider the affordability of a mortgage and ensure payments can be met in the long-term. However, many renters have a lengthy track record of paying money for their accommodation – it’s time for rental payments to be used as supporting evidence when deciding if someone can afford a mortgage.”

The government responded to the petition in a statement, saying that “meeting rental payments is not sufficient in itself to demonstrate affordability over the lifetime of the loan,” because lenders need to consider wide range of factors such as household expenditure, loans and quality of living costs to demonstrate mortgage affordability.

“It is important to be aware that home ownership brings a number of additional expenses that may not be incurred when renting, including maintenance costs and buildings insurance,” the statement added.

However, Steve Burrows, managing director of LateRent and Landlord Secure, 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,” Burrows continued, “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.”

The debate starts at 4.30PM today and can be watched live here on Parliament TV.

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