Rental payments adding to creditworthiness
The Rent Recognition Challenge, an initiative to use technology to help share rental payments histories with lenders and credit reference agencies, has made further progress.
The first £600,000 of £2m allocated by government to the project was split equally between six start-ups – RentalStep, CreditLadder, Bud, Canopy, FirstHomecoach and Movem.
Now the start-ups have been whittled down to three which will each use the remaining £1.4m share of funding towards further developing the apps.
Credit Ladder allows tenants to report their rent payments, giving prospective buyers the chance to apply for a mortgage with a good credit rating.
Bud, a similar system, is designed to integrate into existing mobile banking apps.
Thirdly there is RentalStep, a landlord-tenant matching platform, which allows landlords to purchase a tenancy management service through the platform and rental payments to be tracked and reported.
“The monthly rent is often the biggest expense that people face. Yet most lenders are unable to take it into account when working up a credit score. Three pioneering apps have found a solution, and we’re giving them the investment and support they need to help Britain’s 11m renters achieve their dream of owning a home” explains John Glen, economic secretary to the Treasury.
Ultimately the government wants the end product to support a scheme – reported on by Letting Agent Today extensively – where tenants’ rent payments are counted towards their credit scores.