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Treasury keen to include rental payments on UK credit profiles

Cherry Reynard
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Cherry Reynard

A Treasury minister has pledged the government will raise awareness on services that allow rent to enhance consumer credit profiles and added it would investigate how Open Banking could provide further similar opportunities.

The move followed requests from several MPs of various parties for the government to work with credit reference agencies to find a way to better take account of renters making regular payments. This was identified as an obstacle preventing first-time buyers prove they could afford a mortgage.

The calls came as part of the Parliament debate about whether rent payments should be used as proof of mortgage affordability, which was prompted by the petition of Jamie Pogson from Plymouth.

Several MPs discussed the fact Experian and Big Issue Invest were working with registered social housing providers to incorporate tenants’ rent payment history into their credit files, with no cost to either the housing provider or the tenant.

They noted that in more than 70% of cases, tenants with no significant arrears have increased their credit score.

Raising awareness

Responding to the points, economic secretary to the Treasury Stephen Barclay acknowledged that part of the problem was that awareness of such schemes was low.

“The government would like increased take-up and more ways to develop such models,” he said.

“It is important to do things in a way that works with and builds on existing systems and processes, to avoid increasing costs for business and making it more expensive or difficult for people to access mortgages.”

Barclay added that it was encouraging to see the number of mortgages granted to first-time buyers, now at the highest levels since the financial crisis, but that it was clear many people still struggled to make the first step on to the housing ladder.

“Lenders and credit reference agencies being able to access data relating to a prospective borrower’s history of paying rent will benefit both the borrower and the lender,” he said.

“I am keen to look for ways to raise awareness of those, and to look at how we use Open Banking to open up further possibilities in future.”

Lender co-operation

Earlier in the debate, Martin Whitfield, Labour MP for East Lothian, called for the reintroduction of individual case assessment and greater co-operation between lenders and credit agencies.

“It is not beyond the wit of credit reference agencies and mortgage lenders to do that, and they should examine that suggestion,” he said.

“The imaginative ideas that have been proposed can be looked at and developed. However, to write off many people who have such consistent evidence of being able to afford a mortgage, simply because the element of rent is not credit, is disingenuous.”

David Jones, Conservative MP for Clwyd West, suggested the government could work with credit reference agencies to develop a web portal to enable individual landlords to register rental data.

“There would be every incentive for landlords to do so, given that in due course they would be interested in establishing the creditworthiness of future tenants, who might have reported via the same means,” he said.