UK Politics

Mortgage lenders 'should consider rent payment record'

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Mortgage lenders should look more favourably on people who pay their rent on time, a Treasury minister has said.

Stephen Barclay was responding to a petition calling for rent payments to be taken as proof people can meet mortgage payments.

He said other factors should still be taken into account, but rent should be given more weight by credit agencies.

Petition organiser Jamie Pogson said he had paid £70,000 in rent on time but was still struggling to get a mortgage.

Mr Pogson's petition attracted 147,307 signatures, which led to the issue being selected for a debate in Parliament.

He said: "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."

Lenders currently consider a range of factors when assessing a mortgage application, including the borrower's income and expenditure.

Mr Barclay, Economic Secretary to the Treasury, told MPs current regulations did not stop them taking account of rental payments.

"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."

Experian's Rental Exchange scheme, delivered in partnership with the Big Issue, already allows a tenant's rental payments to contribute to their credit score.

Mr Barclay, who was taking part in the Westminster Hall debate on Monday, said the government "would like to see more models like the Experian model".

'Market-based solution'

Paul Scully, Conservative MP for Sutton and Cheam, who led the debate, said: "Past rental payments do not give any guarantee for the future but they do give an idea of creditworthiness.

"Having a more rounded picture of an applicant's financial history can lead to more informed decision-making by lenders."

However he said a "market-based solution" rather than legislation could have greater flexibility.

Shadow Economic Secretary to the Treasury, Jonathon Reynolds also backed the principle of taking account of rental payments.

A response to the origianl epetition from the Treasury said beyond regulations put in place by the Financial Conduct Authority, which require lenders to conduct an affordability assessment including analysis of income and expenditure, mortgage decisions "remain commercial decisions for lenders, and the Government does not seek to intervene in these".

The Petitions Committee considers all petitions which receive over 100,000 signatures for debate.

Petition debates cannot change the law and MPs do not vote on whether to implement the petition.

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