Mortgage lenders 'should consider rent payments' as part of application
Those who are applying to buy a home should be able to use their rental payment history as a way to prove to lenders that they are reliable when it comes to repayments, it has been claimed.
Many younger people who are buying their first home will rent for a while before they apply for a mortgage because it gives them a chance to save enough money to pay their deposit. But at the moment, there is no system in place that asks mortgage lenders to take payment history in a rented home into account when assessing if someone is suitable for a house purchase loan.
Treasury minister Stephen Barclay was responding to a petition that asked the government to make lenders consider rent payment history when they are assessing someone's application. The petition was backed by more than 147,000 people, and Mr Barclay said he agreed with its sentiment.
He said that other factors still need to be taken into account when someone makes an application, but added that there needs to be more weight given to mortgage repayments, particularly by credit agencies.
The organiser of the petition, Jamie Pogson, said he had paid more than £70,000 in rent, all on time, when he applied for a mortgage to buy a home, but he still found himself rejected.
"Since living on my own I have paid £70,000+ in rent on time yet still struggle to get a mortgage. Unless you're getting handouts, wealthy or in receipt of inheritance it's almost impossible."
And Mr Barclay told MPs that "the government agrees that a history of paying rent on time is a factor that lenders can consider when assessing creditworthiness but it is a factor alongside other factors that they should take on board.
"Credit reference agencies being able to access data relating to histories of tenants paying rent will benefit both the buyer and the lender."