RLA call for credit referencing agencies to include rental payments

by Property118.com News Team

10:24 AM, 17th August 2017
About 4 years ago

RLA call for credit referencing agencies to include rental payments

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RLA call for credit referencing agencies to include rental payments

The Residential Landlords Association (RLA) have today called for  credit referencing agencies, such as Experian and Equifax, to include rental payment history when calculating the credit rating of tenants.

This would seem only fair when the penalty for landlords and home owners for even one month of missed mortgage payment can be so severe when applying for a new loan or mortgage.

However, the practicalities of this are very difficult, because a tenancy agreement is not considered a consumer loan meaning there is currently no authority to collect this information, who would collect it and how can you be sure it is accurate.

The RLA conducted a survey of 3000 Landlords showing 61% would be in favour of rental payments being included in a credit score. This would obviously assist landlords for any reference assessment in taking on a new tenant.

Therefore the RLA is writing to the government requesting cooperation with the industry to consider how rental payment history could be included when calculating credit scores.

Alan Ward, RLA’s Chairman, said: “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.”

Experian themselves have recently suggested a similar idea so watch this space although, government appetite for anything that may help landlords or in anyway disadvantage renters from getting on the property ladder will be low while chasing popular opinion in a hung Parliament.

 

Comments

Mark Alexander

8:04 AM, 18th August 2017
About 4 years ago

Reply to the comment left by Whiteskifreak Surrey at 18/08/2017 - 07:42
I'm not suggesting you use an agent, it's not for everybody although I swear it worthwhile for me. However, all landlords could direct debit to collect rents and it baffles me why they don't. If a tenant cancels a standing order it's up to you to spot that the rent hasn't appeared in your bank account and to chase. If a tenant cancels a direct debit you are informed instantly. If a payment bounces, the tenant pays a fee to the bank and then the direct debit collection company keep trying daily.

The system I've used in various businesses is called GoCardless. It is simple to set up, fees are reasonable and reporting is superb.

Monty Bodkin

8:54 AM, 18th August 2017
About 4 years ago

Reply to the comment left by Mark Alexander at 18/08/2017 - 08:04
"However, all landlords could direct debit to collect rents and it baffles me why they don't."

For me, it is an extra unnecessary cost. Doing a rough, quick calculation it would cost me £10,000+ over the years.

Mark Alexander

9:25 AM, 18th August 2017
About 4 years ago

Reply to the comment left by Monty Bodkin at 18/08/2017 - 08:54
Maybe, but how much does it cost you not to?

Neil Patterson

11:37 AM, 18th August 2017
About 4 years ago

Hi John, If you haven't paid for your phone upfront I do believe it is a credit agreement.

If you own the phone and just pay for calls it is a service agreement I believe but I am not an expert on phone contracts.

Monty Bodkin

12:25 PM, 18th August 2017
About 4 years ago

Reply to the comment left by Mark Alexander at 18/08/2017 - 09:25
"Maybe, but how much does it cost you not to?"

Well, nowt Mark. Tenants pay by standing order, I check my accounts online every day, any missed payments I'm straight on to it.
Suppose with direct debit I might get a few days earlier notice of a problem should they cancel the DD but I'd still have the problem.
It doesn't justify the expense for me personally.

Mark Alexander

15:19 PM, 18th August 2017
About 4 years ago

Reply to the comment left by Monty Bodkin at 18/08/2017 - 12:25
That pre-supposes you have unlimited available time and hence place no value on the time you spend doing this acivity.

On the other hand, I have very limited available time resource, as do many others, and on that basis time is an extremely valuable commodity.

Monty Bodkin

15:53 PM, 18th August 2017
About 4 years ago

Reply to the comment left by Mark Alexander at 18/08/2017 - 15:19
I'd be monitoring my accounts on a daily basis whether a landlord or not Mark.
But yes, I prefer the hands on approach. Each to their own.

Richard U

16:17 PM, 18th August 2017
About 4 years ago

Similar topic, different solution. Now that all deposits are held with a protection scheme and the data they hold includes: deposit withheld for non-payment of rent, deposit held for damages, tenancy length, details of landlord and tenant and property inhabited. Aren't they very-well placed to provide a tenant-check portal?

Yvette Newbury

14:37 PM, 19th August 2017
About 4 years ago

Reply to the comment left by Dylan Morris at 17/08/2017 - 19:32
I was hoping that private landlords would be able to report to Experian regarding rents received, but it seems that's not the case.

Dylan Morris

17:45 PM, 19th August 2017
About 4 years ago

Seeing whether rent payments have been made on time is very simple. I do what mortgage lenders do. I ask for the last 12 months bank statements showing rent going out each month. If tenant cannot provide statements or pays their landlord in cash then that's not a risk I am prepared to take and it's bye bye applicant next one please. (Works well for me and I also get a chance to have a sneak peak at their bank account conduct). And doesn't cost me a penny.

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