1,000 sign petition urging lenders to take rent payments into account
Parliament could be set to debate a change to the current lending rules which would allow banks to consider rent payments when deciding whether to offer a mortgage to an applicant.
A petition calling for a change to mortgage lending rules has secured more than the 100,000 signatures it needs to be considered for a debate in parliament. And, any amendment to the rules could make it easier for renters to prove that they can afford a new mortgage.
While mortgage payments often work out cheaper than rent, tough lending rules mean that showing that you have successfully paid rent for years isn’t generally good enough for a bank to agree a home loan.
This could be set to change after a petition calling for a change received more than 120,000 signatures. Jamie Pogson, who set up the petition, wants lenders to take into account rent payments when underwriting a new mortgage, and the success of the petition means it will be considered for a parliamentary debate.
Pogson says: “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, are wealthy or are in receipt of an inheritance, it’s almost impossible. I want paying rent on time to be recognised as evidence that mortgage repayments can be met.”
At present, lenders make underwriting decisions based mainly on payslips or tax returns which show the level of income you receive. They also undertake expenditure checks to establish that the mortgage will be affordable to you. These rules came into force following the financial crash to ensure that lenders were responsible, and that they didn’t hand out too many sub-prime or ‘self-certification’ mortgages to borrowers who would struggle to pay them back.
Some experts believe the rules have gone too far the other way, meaning that many borrowers are finding it difficult to get a new mortgage. The petition is calling for the Prudential Regulation Authority – part of the Bank of England and therefore a branch of government – to alter the rules to let applicants use tenancy agreements and bank statements to prove that they have maintained a rental agreement without problems.
Mortgage expert Mark Homer told Metro: “It has to be a positive step for lenders to increase the number of sources and metrics (as long as they have proven to be robust) which they will accept when assessing the affordability of a borrower.”