Emma Martin, 28 November 2017
In today’s economic landscape it seems absurd that tenants who privately rent, or who live in social housing, do not benefit from having regular rental payments taken into account when it comes to their credit score.
In a world where a huge number of people choose to rent as an alternative to buying it may seem unfair that tenants with a good history of rental and council tax payments do not benefit in the same way as someone who pays a mortgage – simply because they are not homeowners.
In order to try and remedy this Big Issue founder Lord John Bird has put forward the Creditworthiness Assessment Bill which aims to give fairer access to more affordable credit for tenants.
Lord John Bird commented on the matter in a debate at The House of Lords, “If you are a mortgage holder, and if you pay your mortgage on time and do not miss it too often, you will automatically have a higher credit rating, because the credit agencies will look at you and say that you are a jolly good chap, woman, student or whoever.”
He continues, “But you might have been living in social housing, or in another form of rented accommodation, for one year, five years, or 10 years. There are the boxes to be ticked at the bottom of the form saying, ‘Are you a tenant?’ or ‘Are you a householder?’ and, if you are a householder, that box is ticked.
If you are a tenant, the paper is normally thrown away, not even considered, or you will be given a very low credit rating, because they do not take into account the fact that you are paying your rent. You could be an incredibly good tenant, paying regularly for many years—or you could be a lousy mortgage holder.”
The bill has received a second reading by The House of Lords, and has enjoyed significant support so far. It will now move committee stage where it will be further analysed.
The Creditworthiness Assessment Bill is just another piece in the puzzle for a government that appears to be trying to make a fairer, more accessible and ethical property market for those struggling to get a foot on the housing ladder.
There is an argument though that the inclusion of rental and council tax payments on credit scores will not only benefit long terms tenants in building up a positive credit score to allow for future affordable lending; but that it will also help landlords who will be able to more transparently understand a prospective tenants payment history.
The move has been further supported by an online petition to government, backed by 147,307, as well as through the results of a survey by the Residential Landlords Association who found that 61% of landlords would be in favour of the new law.
While the bill still has some way to go until being made law, it appears that the early stages of the ruling have received positive government and public support, and as such may well be carried forward in 2018.
Emma Martin, 28 November 2017