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Dec 8 2017

The Credit-worthiness Assessment Bill


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Last  week, The House of Lords gave the “Credit-worthiness Assessment Bill” a  second reading. So what, you might ask? Well if you remember, for years  leading up to the budget, we've been vocal in supporting  action on stamp duty, particularly for first-time buyers (also for  down-sizers, but we are yet to see action in this area). The process of  this bill moving through the Lords system is a good sign that attention  is being paid once again to what those in the  industry, ourselves included, have been saying.
 
Lord Bird has  described the contents and main thrust of the bill as “If you are a  mortgage holder, and if you pay your mortgage on time and do not miss it  too often, you will automatically have a higher credit  rating...But you might have been living in social housing, or in  another form of rented accommodation, for one year, five years, or 10  years....They don't take into account that you are paying your rent.”
 
In the budget there  was also an announcement from Phillip Hammond that £2m was up for grabs  for the creation of a technology that would allow for credit scoring  companies to include rental payments in their  calculations.
 
Consistency in  meeting payments for rent is very significant, and even more-so when you  consider that last week a statistic was revealed that in 12 local  authority areas in the UK, rent makes up 60% of the  average salary. On average, across the UK, private renters give up 35%  of their income to their landlords.
 
Growing support for  the credit-worthiness assessment bill across all government parties  gives it a good chance of coming to fruition in 2018. With an online  petition to the government saying “Paying rent on  time should be recognised as evidence that mortgage repayments can be  met” reaching enough support to get the attention of government, we  expect and hope that this will form part of the future discussions.
 
We want to see more  tenants given the opportunity to own their own homes, and in a lot of  cases, if rental payments are being met, this is a strong sign that they  would be able to maintain mortgage payments.

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