A PropTech startup has restated its support for the government’s Creditworthiness Assessment Bill and the movement towards mandatory inclusion of tenants’ rental payment histories in credit scores.
RentalStep, a company which looks to provide a solution to this problem, says that the day when all credit scores include rental payment histories can’t come soon enough.
Launched last year, the Creditworthiness Assessment Bill aims to make this measure a legal requirement. The Bill, which was put forward by Big Issue founder Lord John Bird, is currently awaiting a third reading in the House of Lords, before being debated in the House of Commons.
Mike Georgeson, founder and chief executive of RentalStep says: “We are delighted to see the cross-party and property industry support this movement has received so far and we relish the opportunity to continue working with the government to make this much-needed requirement a reality for all tenants.
“Making sure that all rent payments contribute towards credit scores should be considered a matter of urgency.”
He references the latest English Housing Survey, published in January, which shows that private renting is now the largest housing tenure in London and accounts for 20% of all households in England (4.7 million).
“With such a high proportion of the population privately renting, and therefore a phenomenal amount of money being spent on rent each month, it’s imperative that these payments are recorded and contribute towards something as crucial as a credit score,” Georgeson explains.
“More people are choosing to rent for lifestyle reasons and for longer periods of time, meaning they’re likely to build up a history of payments which should provide a useful insight into their financial situation.
“Rent is often described as ‘dead money’ but if it contributes towards helping renters get a loan or mortgage in the future, it can become much more valuable.”
Rent being recognised in credit scores can’t come soon enough
RentalStep looks to find a system to verify monthly rental payments
The startup was recently named as one of six winners of the government’s Rent Recognition Challenge. This new innovation allows landlords and letting agents to verify tenants’ monthly rental payments. RentalStep has also partnered with Experian, meaning that as tenants pay rent on time over a prolonged period, their credit score will subsequently increase.
Georgeson continues, “our TenantPassport is free for renters and provides landlords and agents with comprehensive reference and credit reports of prospective tenants.”
The government’s challenge offers a £2 million prize fund to tech firms developing solutions that allow tenants to share their rental payment histories with mortgage lenders and credit reference agencies.
Along with the five other winners – whittled down from 43 entrants – RentalStep has received £100,000 in funding to support the development of its product.
The next stage of the competition will see three or four of the winning startups receive further funding to enhance their offering and bring it to the attention of a wider market.
“We’re delighted to be named as one of six winners of the Rent Recognition Challenge,” says Georgeson.
“It’s now time to further develop our platform while continuing to raise awareness of the Creditworthiness Assessment Bill and the importance of these issues for future generations.”
Also check out Just Landlords’ article on how rent credit scores could help tenants become buyers.