Rental payments platform PayProp has called for rental histories to be added to tenants’ credit scores which is says will help re-ignite the first-time buyer property market.
The company, which started in South Africa but now has a substantial presence in the UK and elsewhere, says enabling tenants to use their regular rent payments to improve their credit scores would help more first time buyers get on to the property ladder, and also incentivise tenants not to pay their rent late.
“Many tenants have been paying rent on time for years, if not decades. The fact that this does not carry the same weight as a mortgage payment is hard to believe,” says Neil Cobbold, CEO of PayProp in the UK (pictured, below).
“Thanks to the rapid growth of the private rental sector, more tenants are paying higher rents. Taking cognisance of rent payments would therefore make perfect sense, encouraging the next generation of property buyers.
“Recording and counting rent payments towards credit scores is a modern phenomenon and therefore it needs a modern solution,”
Credit reference agencies and lenders in the UK are not required to take rental payment into account when ‘scoring’ borrowers, and only Experian does so voluntarily, but only for tenants who rent via large-scale landlords and housing associations.
Individual tenants can ask to have their rental payments paid through Experian via stand-alone service CreditLadder.
Also, last year saw significant support from the government and campaigners for rental payments to be added to credit scores. This included a parliamentary debate following a 140,000-strong e-petition, the launch and second reading of Lord Bird’s Creditworthiness Assessment Bill in the Lords, and a £2 million initiative funded by the government to find the best tech platform to record rental payments by tenants.
“It’s great to see other businesses support the Creditworthiness Assessment Bill,” says Sheraz Dar, CEO of CreditLadder (pictured, right) which currently works with 650 letting agents across the UK.
“We have always believed a tenant’s rent payment should count towards their credit score and this is something we’ve been supporting for over a year with Experian.
“In two weeks time we are fundamentally changing how a tenant’s rent payment will be verified as we embrace changes in technology and legislation, this will also allow us to enhance and support tenant referencing.”