MSE News: U-turn means flatmates' poor credit won't harm you

HAMISH_MCTAVISH

fermi wrote: »

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."

I'm sure James will be along shortly to clarify.

But I strongly disagree that it would be either advisable or practical to differentiate between tenants in a joint and several liability lease.

Tenants need to take paying rent seriously. It's every bit as serious a commitment (albeit shorter in duration) as paying a mortgage.

If one flatmate is late with their share of the rent, then the legal reality is that ALL flatmates are late with that part of the rent, and it is their joint responsibility to cover it and pay it on time.

The law is very clear in this regard.

If landlords wish to set up an HMO and rent rooms individually, or tenants wish to rent on that basis, they can do so now and that's different.

But where tenants wish to control who lives in a premises, then they must all take responsibility for the entire rent, whether or not one of them does not pay.

And their credit report should reflect whether or not they have honoured that entire legal obligation, not just a part of it.

Plus Martin adds that you could also add a NOC to say that your part had always been paid.

And that is fair enough.

But I must emphasise that in a joint and several lease, if a flatmate is late with or does not pay their rent, and you do not pay the rent on their behalf, then you are just as much in default of your rental agreement as they are and your credit report must reflect that legal reality.




.

Callie22

HAMISH_MCTAVISH wrote: »

Tenants need to take paying rent seriously. It's every bit as serious a commitment (albeit shorter in duration) as paying a mortgage.

As a tenant I already take paying rent seriously - and I have a number of years' worth of bank statements to back up the fact that my rent has been paid early, every month, without fail.

But the fact that I take paying my rent seriously does not alter the fact that a lot of landlords and letting agencies don't take their jobs seriously. Mistakes frequently happen - Billy Landlord changes his bank account and doesn't tell the tenant, Colin Letting Agent 'mislays' the rent and both turn round and accuse the tenant of paying late. Why on earth should these people, who operate in an industry that is pretty much left to self regulation, be able to have an impact on my credit score? Their mistakes, laziness or just plain sloppiness could ultimately lead to me being unable to find somewhere to live. As I said in the other thread on this, this move should not go ahead unless tenants can be assured that information will be recorded accurately and fairly, and I have no faith that Experian, my Landlord or my Letting Agent will actually do that.

HAMISH_MCTAVISH

Callie22 wrote: »

a lot of landlords and letting agencies don't take their jobs seriously. Mistakes frequently happen - Billy Landlord changes his bank account and doesn't tell the tenant, Colin Letting Agent 'mislays' the rent and both turn round and accuse the tenant of paying late. Why on earth should these people, who operate in an industry that is pretty much left to self regulation, be able to have an impact on my credit score?

No system in life is foolproof, and some errors are inevitable in anything. I've had my bank make an error over a payment in the past. But I was able to get it resolved and the reference removed from my file, as I could prove that I was in the right and the bank had made a mistake. It was a relatively easy and painless process too.

No doubt the same rules will apply here.

If you've paid the rent on time and in full then you have nothing to worry about. Any errors can be corrected.

And I am quite sure that for every error that is made and can be easily corrected, there will be hundreds of genuine late or non-payers reported, and tens of thousands of good payers rewarded with a better credit rating.

Both tenants and landlords will be in a better place because of this system, and I for one think it's a great idea.

jjlandlord

It seems far from obvious that tenants will be "in a better place" with this scheme considering the potential for problems even if not of their own making.

The exception imo, could be tenants who otherwise have 0 credit history, as this could allow them to build one.

For the rest, not too sure... After all first time buyers do get mortgages and they do get them at competitive rates.
Would they get an even better deal with rent payment record? I doubt it.

Let us remember that such credit records and checks are mostly for the benefit of the creditors, not debtors.
And so, of course for landlords this scheme will be useful.

jjlandlord

HAMISH_MCTAVISH wrote: »

But I strongly disagree that it would be either advisable or practical to differentiate between tenants in a joint and several liability lease.

Indeed.

I think many people signing up for joint tenancies do not understand the full extent of the implications.
There are many examples of these forums of people choosing their joint-tenants extremely casually when it is actually crucial to pick the right persons.
One wouldn't open a joint bank account with a near stranger, yet they often seem to be happy to get into a joint tenancy with one.

And as you say, if the commitment is too much, then they should go for individual tenancies.

HAMISH_MCTAVISH

jjlandlord wrote: »

Indeed.

I think many people signing up for joint tenancies do not understand the full extent of the implications.
There are many examples of these forums of people choosing their joint-tenants extremely casually when it is actually crucial to pick the right persons.
One wouldn't open a joint bank account with a near stranger, yet they often seem to be happy to get into a joint tenancy with one.

And I you say, if the commitment is too much, then they should go for individual tenancies.

Absolutely.

And I do think the fact that rents are not currently credit agency reported has enabled a lot of tenants to overlook their responsibilities in this matter.

Which only ends up costing everyone in the long run.

It's a bit of a myth that tenant defaults only penalise landlords. All tenants eventually end up paying more as market rents are driven up to cover the risk of defaults.

I could actually see the rental market evolving over the long run to be similar to the mortgage market ins some ways, where sub-prime tenants have far less choice and pay far more to rent than those with an exemplary rental record.

Interesting times.

Callie22

HAMISH_MCTAVISH wrote: »

No system in life is foolproof, and some errors are inevitable in anything. I've had my bank make an error over a payment in the past. But I was able to get it resolved and the reference removed from my file, as I could prove that I was in the right and the bank had made a mistake. It was a relatively easy and painless process too.

No doubt the same rules will apply here.

If you've paid the rent on time and in full then you have nothing to worry about. Any errors can be corrected.

And I am quite sure that for every error that is made and can be easily corrected, there will be hundreds of genuine late or non-payers reported, and tens of thousands of good payers rewarded with a better credit rating.

Both tenants and landlords will be in a better place because of this system, and I for one think it's a great idea.

As a tenant, unless I pay to frequently check my credit score, then it's likely that I'll only find out that there's a problem when I'm suddenly rejected for a rental property. Fine, I can sort the problem out but it's more than likely that by the time I do, I'll have lost out on that property and lost money through having to pay letting agency fees - potentially, I could end up homeless, albeit temporarily.

It's stressful enought moving when you rent, without having to spend hours and pounds on the phone to Experian explaining that no, you're not the Miss Smith who didn't pay the rent at Flat 7, Acacia Avenue and please could they amend their mistake because you're now having to sofa surf because you can't get a tenancy. And no, you can't send them copies of your passport, utility bills and previous tenancy agreement because they're all packed in boxes ... This isn't like being turned down for a mobile phone contract - this is a situation whereby a mistake could impact seriously someone's ability to find somewhere to live.

As I said, my experience of Experian, Landlords and Agents is that they are all generally unprofessional. It is hard to function in this world without somewhere to live, and I'm reluctant to allow amateurs even more control over that.

And I also don't agree that this'll make any practical difference to my credit score, or what I can do with that. Barclays and my landlord's bank already know I pay my rent every month, and I certainly haven't had a letter from either of them offering me a great mortgage because of that.

jamie11

Callie22 wrote: »

As I said, my experience of Experian, Landlords and Agents is that they are all generally unprofessional. .

My thoughts are that Exprian may be too professional, that once a black mark is registered it may be almost impossible to remove it,

Agents being unprofessional is fairly normal, most of them are numpties.

credit-geek

It looks like it will take sometime for Experian, to build this database of rental data (could be years before it impacts the bulk of the 4 million uk renters), and I agree with many posts here that its vulnerability is in relying on the Landlords to upload the correct data.

When lenders share financial data with credit reference agencies this is not foolproof, but it is in their interest to do so and they have processes in place, to manage this data, the same cannot be said for landlords.

It is difficult to tell the impact this will have as the vast majority of renters will not be included at all.

I can see some positive for long term renters, potentially, but even if you do rent, you can have plenty of other credit arrangements, that can build a good credit history.

My concern is with younger renters, like students, who are not concerned about their credit files, and it is good they will not, now be held liable on joint tenancies, if their co-tenants, miss payments.

Pmarmalade

Well done!

I'd like to have thought my always on-time rent payments would have been seen as a positive when applying for a mortgage but not at the expense of a flatmate's personal debts being linked with my credit history...