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MSE News: U-turn means flatmates' poor credit won't harm you
Former_MSE_Helen
Posts: 2,382 Forumite
This is the discussion thread for the following MSE News Story:
"Tenants won't be rejected for a mortgage or loan because their flatmate has a poor credit score, following MSE pressure..."
"Tenants won't be rejected for a mortgage or loan because their flatmate has a poor credit score, following MSE pressure..."
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Comments
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A good result, linking tenants financially was a step too far.
This result lets the scheme proceed with all of the benefits and none of the drawbacks.
-Landlords will have the reassurance that tenants, who are almost always "jointly and severally" liable for the full rent amount, will have an incentive to better check up on their flatmates ability to pay before letting them move in.
-Tenants will be able to build a credit history showing the ability to pay for their rent every month, which will give lenders of mortgages better information to work from at higher LTV lending, particularly important now that high rents are preventing many people from saving for the current high deposits.
-Tenants who manage their affairs well will have access to a better choice of housing than those who do not.
-Landlord arrears will fall, as the risk of impacting your credit rating and spoiling your chances of getting a mortgage is simply not worth taking for most people.
Very much a win-win situation.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »-Tenants will be able to build a credit history showing the ability to pay for their rent every month, which will give lenders of mortgages better information to work from at higher LTV lending, particularly important now that high rents are preventing many people from saving for the current high deposits.
-Tenants who manage their affairs well will have access to a better choice of housing than those who do not.
-Landlord arrears will fall, as the risk of impacting your credit rating and spoiling your chances of getting a mortgage is simply not worth taking for most people.
Very much a win-win situation.
I think it's good .....as far as it goes but there are a huge number of tenants that really don't give a toss about their credit scores, for those responsible ones then all well and good, it might help them climb the ladder, for those not-so-responsible what is going to change? They have a bad score now, they will have a bad score then.0 -
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James Jones (the Experian Rep) doing the U-Turn live on BBC Radio5Live.
http://www.bbc.co.uk/i/b01djp23/?t=40m59sFree/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB
IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed0 -
They won't be able to rent (or will have limited choice / have to pay higher deposit etc).
I think you are missing my point. As I understand it this new credit scoring for rent only affects the private sector, so that's us poor flipping landlords collecting all the dregs of non payers while all the good payers move on to house buying, before long the only people renting in the private sector will be those with poor ratings.
Expect to see a surge in requests for social housing!
Would councils have to take them on if they have a record of rent arrears in the private sector? I think maybe not.0 -
HAMISH_MCTAVISH wrote: »A good result, linking tenants financially was a step too far.
-Landlords will have the reassurance that tenants, who are almost always "jointly and severally" liable for the full rent amount, will have an incentive to better check up on their flatmates ability to pay before letting them move in.
I agree the change was necessary.
But I think this is still a step too far. Tenants are jointly and severally liable - but if flatmates haven't been paying the rent, then, unfortunately, often the first people hear about it is when payments have been missed, and arrears have built up. And you realistically aren't going to be able to pay off someone else's arrears at the drop of a hat.
So presumably that will impact on credit ratings? This is still massively unfair.0 -
They won't be able to rent (or will have limited choice / have to pay higher deposit etc).
Exactly.
Tenants are now being given fair warning, this scheme will roll out nationally and within a few years I'd suspect the vast majority of landlords will be using it.
Time to start prioritising paying rent on time, or risk the consequences of being unable to rent much privately in the near future.Expect to see a surge in requests for social housing!
Fairly sure being slack about rent payments would count as "intentionally making yourself homeless".“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
that's us poor flipping landlords collecting all the dregs of non payers while all the good payers move on to house buying, before long the only people renting in the private sector will be those with poor ratings.
That's nonsense; people don't rent now instead of buying purely because their rent payments aren't on their CRA file!
Yes, it may help some, but lets face it, if a lender wanted to know whether I pay my rent in full, on time, without fail, it would take me less than 2 mins to show the last 6 years of rent payment on my bank statement.
The biggest issue facing home-buyers is the deposit - and this isn't going to change that! (unless banks offer a favourable LTV if they have a good record of paying on time on their file)0 -
ImageChange wrote: »Tenants are jointly and severally liable - but if flatmates haven't been paying the rent, then, unfortunately, often the first people hear about it is when payments have been missed, and arrears have built up. And you realistically aren't going to be able to pay off someone else's arrears at the drop of a hat.
I disagree.
There are primarily two types of shared private rental situation.
1. Joint and several liability such as a flat share.
2. Direct landlord managed HMO.
In the first instance, a group of people rent a house together and are all liable for the full rent. They should all be well aware of what is being paid, usually one person (lead tenant) collects the rent from flatmates and pays it.
It's not the landlords job to chase them each for their share. If he wanted to do that, he'd set it up as a directly managed HMO and make more money.
In the case of landlord managed HMO's, where people rent a room directly from the landlord, then there is no joint and several liability but it's almost always more expensive as the landlord is assuming the hassle and risk of non-payers.So presumably that will impact on credit ratings?
Yes.
Which provides a clear incentive for tenants to be careful about who they rent with, and ensure the full rent is paid on time.This is still massively unfair.
No it isn't.
It's tenants fulfilling the obligations they agreed to in the lease.
Nothing unfair about it.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
ImageChange wrote: »I agree the change was necessary.
But I think this is still a step too far. Tenants are jointly and severally liable - but if flatmates haven't been paying the rent, then, unfortunately, often the first people hear about it is when payments have been missed, and arrears have built up. And you realistically aren't going to be able to pay off someone else's arrears at the drop of a hat.
So presumably that will impact on credit ratings? This is still massively unfair.
Possibly. But if you listen to the broadcast in my previous link, it appears Experian may be looking to change their plans on that as well?
(A slight amount of paraphrasing below, but I think this is more or less what was said.)
Martin: If xxx didn't pay his share of the rent, James I'm guessing likely impact on my file as I'd missed my rent because it's jointly and severally?
James Jones: "Well. Possibly. We're looking at this very carefully, I mean, there is an argument to record, like you do with a joint loan the joint and several liability to reflect the whole monthly payment on a credit report. "
"But I think it would be important at the same time to reflect the number of people that are responsible for that payment so lenders have all the information at hand - and if possible, but we don't know if we can do this yet, but we're certainly looking at it - if part of the monthly payment has been missed and the landlord knows who has missed that payment, we would like to reflect that in the data."
Plus Martin adds that you could also add a NOC to say that your part had always been paid.Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB
IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed0
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