It looks like first time buyers could be in their best position in years, with the abolishment of stamp duty last year, and the added pressure to make rental payments a mandatory addition to credit scores.
Could this be the incentive needed for the next generation of home buyers?
Automated rental payment provider, PayProp says that these combined changes mean that tenants could soon be in their best position to get on the property ladder.
But the benefits don’t just stop at the tenants, landlords and lettings agents could also see benefits in this arrangement.
The prospect of a better credit score will not only encourage tenants to pay their rent on time, but it means that landlords are likely to have a better cash flow and lettings agents will be issuing far fewer rental arrears. Additionally, landlords and agents referencing tenants would benefit from having a better idea of renters’ payment history and their financial situation.
Industry campaigning makes a difference again.
The move towards including rent payments in credit scores has gathered an increase of momentum over the past 12 months. Regular campaigning by industry organisations and an online petition has forced MPs to discuss the issue in Parliament.
Following the debate, Lord John Bird – the founder of the Big Issue – launched the Creditworthiness Assessment Bill which promises to make sure tenants’ rental payment records go towards credit ratings.
The Bill passed its Second Reading in the House of Lords at the end of November and will now need to go through a Report Stage and Third Reading before getting to the House of Commons.
Although the Bill still needs to clear several Parliamentary requirements before receiving Royal Assent, it has gained plenty of cross-party support and it is likely to officially become law at some point in 2018.
Mathew Wood, Managing Director of Orchards Estates comments “first time buyers could finally be in for a win if this Bill passes. This will not only help tenants, many who have continually met rent arrangements, but it will help the overall property market, and in turn, boost the overall economy”.
Government supports PropTech with Rent Recognition Challenge
The campaign was further supported by an announcement made in the recent Autumn Budget with the government has put aside £2 million for technology entrepreneurs wiring to develop an application that allows relevant data to be recorded and processed.