My plan for a mortgage pathway for renters
Young people deserve the chance to own a home. But right now the housing market and systems in place simply aren’t working for them.
We have to change this – and fast. This week I announced plans to help us build more of the right homes; but we need to go do more to help people buy.
Every month over 4.4 million households pay their rent on time, month in and month out. We know that rents are going up, and many of these rents are much higher than they would be if it was a mortgage. Right now renters are paying them without getting enough credit.
I have seen first-hand how so many renters up and down the country are young people. And the idea of even buying a house seems totally impossible to them.
Renting can be great, giving people the chance to explore new areas and choose living arrangements. But with money going out the door every month it becomes hard to save for a deposit.
When renters want to buy a home, more often than not they are turned away because they can’t prove they have a good credit history. No matter how many years they have been proving they can be trusted to pay out more than they would need for the mortgage they want.
That is because rental payments are not universally accepted as evidence in a credit history. Young people are cut off from a means of developing good credit and struggle to get on the housing ladder as a result.
If I am elected leader of the Conservative Party, as Prime Minister, I am going to change that.
I will require credit lenders to recognise rental payments as part of someone’s credit history so that people who spend years paying their rent on time can get it recognised in the same way mortgage payments are.
We are already seeing major innovation in the market to correct this imbalance with Experian and Equifax leading the way. But I want all credit lenders to recognise that as the housing market has changed, so too must we.
We also know that right now renters don’t have an incentive to sign up to having their rental payments recognised properly even where they can already. Lenders won’t look at it properly and the technology to do it needs to get easier to use.
I will go even further to encourage the whole market to go further. As Prime Minister, I will launch government-backed deposit loans for renters which will require you to have rental credit history to access. This will give everyone-renters, credit lenders and the banks a reason to fix this problem.
Young people shouldn’t be kept out of the housing market – we have to do more to help them. Many feel like home ownership is a distant dream, but this policy would make it a reality for many.