Posts with tag: rental payments

Parliament to debate rental payment credit rating plan

Published On: September 19, 2017 at 8:54 am

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Private tenants who are prompt with their rental payments may soon see their credit score boosted, which in turn could make it easier for them to get a foot on the housing ladder.

This comes after the news Parliament is to debate the idea of taking rental payments into account when people make an application for a mortgage.

Debate

The debate will take place following a petition on the issue raised by Plymouth construction worker Jamie Pogson attracted 147,307 signatures. This was substantially more than the 100,000 required to force a debate in Parliament.

Typically, credit rating agencies do not routinely include rental payments when calculating credit scores. This means a tenant could find it difficult to access a mortgage, even if they have a long history of prompt and full rental payments.

However, a recent survey of nearly 3,000 buy-to-let landlords carried out by the RLA discovered that 61% of landlords would support rental payments being added to credit histories, just in the same way as mortgage payments.

Parliament to debate rental payment credit rating plan

Parliament to debate rental payment credit rating plan

In addition, the RLA believes that including rent payments in this way will make it easier for landlords to ascertain a more accurate assessment of a prospective tenants’ credit and rental payment history.

Checks

RLA Chairman Alan Ward observed: ‘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.’

‘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.’[1]

 

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/parliament-to-debate-rent-payments-being-added-to-tenants-credit-score

 

 

Tenants are spending half of their pay on rent

Published On: March 22, 2017 at 9:49 am

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New research on the so-called Generation Rent has revealed that UK rents amount to almost half of tenants’ average take-home pay.

The investigation was undertaken by the University of Bristol, on behalf of financial services innovator Momentum UK. Data from the report shows that the typical renter is financially worse off than someone who owns their own property.

Tenant Traits

Further analysis of the report shows that private renters take fewer holidays and are able to save less money. In addition, they are more likely to make cutbacks due to larger affordability restrictions.

Momentum UK’s Index shows than 31% of private renters have less than £100 in savings. This is in comparison to 15% of people with a mortgage on their home. 37% of mortgage borrowers view their income as sufficient, in comparison to 16% of private renters.

Researchers revealed that renters send around half of their salary to their landlord every month. This is only likely to rise, given the fact that many landlords will be left with little alternative to increase rents to recoup losses caused by recent tax alterations.

These include alterations to stamp duty, scrapping the wear and tear allowance and upcoming changes to mortgage interest tax relief, scheduled for next month.

Tenants are spending half of their pay on rent

Tenants are spending half of their pay on rent

Growing Sector

Over four million households in the UK now rent from a private landlord, with this figure almost doubling in the last ten years.

Dominic Baliszewski, director of Consumer Strategy for Momentum UK, commented: ‘The average private renter loses around half of their pay cheque on rent at the beginning of each month, and for those living in London, it can be even higher. This not only limits their ability to save, but also means they have to cut back on expenses such as gym memberships, holidays and socialising just to get by.’[1]

‘With home ownership in decline, the number of people facing these financial challenges and seeing their living standards fall is only going to grow. That’s why it’s so important that the government delivers on the pledges made in its housing white paper,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/tenants-spend-half-their-pay-on-rent

 

More backing for rental payments to be used to prove eligibility

Published On: March 15, 2017 at 2:52 pm

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Categories: Finance News

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Specialist mortgage lender Together has become the latest company to give its backing to the use of rental payments being used in order to measure the eligibility of individuals to secure mortgages.

Recently, an online petition has been set up by an individual tenant that urges regular rental payments to be considered as a measure of his eligibility to secure a mortgage when coming to purchase a property.

Popularity

Pete Ball, head of personal finance at specialist lender, Together, says that the support for the petition shows how popular the idea would be.

Ball noted: ‘The changes the Government has introduced in the buy-to-let sector were intended to level the playing field and ensure more property was available. But what this petition highlights is that there needs to be better access to finance alongside this, so that these aspiring homeowners can get a mortgage for the property.’[1]

‘The impressive surge in popularity of this petition is clear evidence of the growing frustration among thousands of renters that aspire to own their first home but are struggling to obtain a mortgage from the mainstream banks,’ he continued.[1]

More backing for rental payments to be used to prove eligibility

More backing for rental payments to be used to prove eligibility

Criteria

Moving on, Mr Ball observed that many traditional lenders exercise rigid criteria, with proof of rental payments sometimes not taken into account as part of the process.

Concluding, Ball said: ‘As this petition clearly demonstrates there is a need to compile more detailed data on the credit profile of individuals, which will then help lenders to assess their applications when they look to obtain a mortgage. If there is a debate following the petition and it leads to new and improved measures in this space, that will be a positive step for both lenders and these aspiring homeowners.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/3/more-backing-for-using-rent-payments-as-iad-to-mortgage-eligibility

 

New initiative to help tenants strengthen credit score

Published On: August 30, 2016 at 3:05 pm

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A new initiative has been launched in order to help private tenants improve their credit histories by recording rental payments. As such, they will then receive recognition in the same way as mortgage payers.

The scheme has been announced by Experian, which believes many renters stand to lose out on an opportunity to build up their credit scores. They will in turn be at a disadvantage when attempting to secure online deals for features such as car insurance and mobile phone contracts.

Boosts

Alongside helping to strengthen credit histories, The Rental Exchange also plans to give support to the electronic verification of a tenants’ identity when they search for financial assistance online.

One of the initial agents in Britain to pioneer the scheme is Karl Tatler Lettings, with properties across Liverpool.

Head of Lettings at Karl Tatler, Dave Seed, observed, ‘the initiative is a way to strengthen your credit report, without needing to take on new credit or debt, just by paying your rent on time each month. People should not be a financial disadvantage for renting and deserve equal access to services many of us frequently use.’[1]

‘Landlords will also benefit from our partnership with Experian. The Rental Exchange will provide added confidence and reassurance in the quality of tenant such a scheme will attract. These tenants will have a greater incentive and motivation to pay their rent on time as it will directly impact their credit score, potentially leading to even lower rents.’[1]

New initiative to help tenants strengthen credit score

New initiative to help tenants strengthen credit score

Services

Rental Exchange partner at Experian, Mark Goodfellow, said, ‘what many people don’t realise is that you need a good credit rating to access mainstream financial services, from bank accounts, credit cards, personal loans and mortgages, to mobile phone and utilities contracts. In the past, building a good credit rating has been easier for homeowners than for tenants, because mortgage payments are factored in, but with The Rental Exchange we want to help level the credit rating playing field.’ [1]

[1] http://www.propertyreporter.co.uk/finance/new-initiative-helps-tenants-strengthen-credit-score.html