First announced in the Autumn Budget on 22nd November, the government plans to make sure that rent payment history is recognised in credit scores so that first-time buyers who have paid their rent on time benefit when it comes to applying for a mortgage. This could be good news for landlords too, as it will encourage tenants to pay their rent on time.
The Creditworthiness Assessment Bill appears to have strong support from all parties, and may even come into law as early as 2018.
The government has now launched a competition, calling on tech companies and entrepreneurs to devise an application that will allow renters to record their rent payment data. This recorded data could then be used to support a mortgage application, allowing rent payments to be included in credit scores. This will reward those who paid their rent on time, and incentivise tenants to pay their rent on time, which in turn will help landlords.
Economic Secretary to the Treasury, Stephen Barclay, said: “People’s monthly rent is often their biggest expense, so it makes sense for it to be recognised when applying for a mortgage. Without a good credit score, getting a mortgage can be a real struggle”.
He continued: “Most lenders and credit reference agencies are unable to take rental data into account, because they don’t have access to it.”
The aim is for tech companies to create a solution to this problem, which will help renters who want to one day buy a home of their own.
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