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

plumber2009

HAMISH_MCTAVISH wrote: »

Why do you keep saying "mortgages are very different"?

There is absolutely no difference in terms of how serious a commitment rent is versus a mortgage. OK, rent is a shorter term, but that's it.

Someone most likely had to take on a mortgage for you to rent a house. Just because it wasn't you that took on the mortgage, doesn't mean it's any less important for you to honour your agreement and pay rent in full and on time.



No we won't.

The market will find a new, higher, pricing level for bad payers to adequately provision for the risk to the landlord of renting to these people.

"Sub-prime" leases, if you like, for "sub-prime" tenants.



It almost certainly will.

Perhaps then you'll realise that paying rent on time is just as important as paying a mortgage on time. There is no difference.




If by "abuse" you mean ensuring problem tenants pay higher rents to cover the higher risk of default, then yes.

Otherwise, not really.



None, I'd imagine.

But that doesn't happen now either. Any mistakes can be corrected.



I have no objection to landlords signing up to a similar scheme.

In fact I'd encourage any of the reference agencies to consider setting up some form of "quality landlord" equivalent to put tenants minds at rest.

First of all. A mortgage helps you work toward buying a property, renting does not and all you are doing is lining the pockets of the rich. Everyone would opt out of renting if they could.

It appears from your attitude that you are selfish if you agree with prime and sub prime renting. Why should those that struggle the most have to pay more.

As for accusing me of believing that paying rent is not as important as paying a mortgage. DONT, as you are clearly wrong.

aldredd

plumber2009 wrote: »

It appears from your attitude that you are selfish if you agree with prime and sub prime renting. Why should those that struggle the most have to pay more..

Equally, why should those who *do* pay month in month out pay a premium to cover those who don't?

(In the same way we all pay extra in our car insurance to cover un-insured drivers)

tbs624

For those who may have missed the earlier thread see also https://forums.moneysavingexpert.com/discussion/3852385

tbs624

HAMISH_MCTAVISH wrote: »

Fairly sure the credit reference agencies will have processes in place to prevent abuse.

I'm sure if you can prove you made a payment they'll be able to correct any mistakes.

Perhaps we could have yet another database, this one accessible by potential Ts - "LLs known to make false statements to deposit schemes and CRAs etc.....;)

tbs624

HAMISH_MCTAVISH wrote: »

The market will find a new, higher, pricing level for bad payers to adequately provision for the risk to the landlord of renting to these people.

"Sub-prime" leases, if you like, for "sub-prime" tenants................If by "abuse" you mean ensuring problem tenants pay higher rents to cover the higher risk of default, then yes..

Think that one through - if the Ts are "bad payers" they will not be able to afford a higher rent even if the LL would like to charge it.

The higher rent wouldn't help a LL who took on a T who may be unlikely to pay on time/in full, whatever was charged, and who had little in the way of resources.

The reality is that there would be a further proliferation of shoddy PRS properties, with absentee LLs who fail to meet their own obligations.

tbs624

HAMISH_MCTAVISH wrote: »

This result lets the scheme proceed with all of the benefits and none of the drawbacks.

Thanks for sharing your opinion. There seems to be little consensus, however, on "all of the benefits", and others see drawbacks where you apparently do not.

HAMISH_MCTAVISH wrote: »

-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.

Let's clarify this one - it is not the Ts who choose the tenancy agreement - it is the LL who usually benefits from there being a J&SL in place and who insists that this is how the property is to be let out. As explained elsewhere. Ts often haven't met one another before signing up for the property. How do you suggest that undertake the necessary checks on who may not meet their obligations? Another database so Ts can check up on one another? Perhaps Ts should also be able to poke about at Experian too? Kerching!

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.

Your concern about Ts being able to obtain a mortgage is touching but they can already "build a credit history" and they can already show whether they pay their rent in full and on time.

HAMISH_MCTAVISH wrote: »

-Tenants who manage their affairs well will have access to a better choice of housing than those who do not.

... covered that one elsewhere

HAMISH_MCTAVISH wrote: »

--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.

Your first 2 words there identify the issues that Experian have locked into and identified as an additional source of revenue IMO

As has already been mentioned by other posters, those who already have financial problems won't much care about their already shot rating and wouldn't be looking for a mortgage anyway.

aldredd

tbs624 wrote: »

As has already been mentioned by other posters, those who already have financial problems won't much care about their already shot rating and wouldn't be looking for a mortgage anyway.

But, if doing this means they HAVE to take responsibility for their financial affairs, else they're homeless, is that not a good thing?

I've said before, that overall, I think the concept is right but not sure on the execution of it. Whilst I'm not 'on the fence' as such - I'm only dangling my feet over one side.

aldredd

plumber2009 wrote: »

First of all. A mortgage helps you work toward buying a property, renting does not and all you are doing is lining the pockets of the rich. Everyone would opt out of renting if they could.

I would disagree. Renting quite suits some people - as it has done for me up until about nowish (for about 10 years), hence now starting to look at buying.

A lot of people move around the country/the world working (as in my case) so renting is an ideal way of living in one place for a short amount of time. Also great for people who want to get to know an area before committing to buying, or people who have sold but not yet found somewhere to buy. Many reasons.

HAMISH_MCTAVISH

tbs624 wrote: »

Think that one through - if the Ts are "bad payers" they will not be able to afford a higher rent even if the LL would like to charge it.

Yet people with poor credit scores pay more for all sorts of things. From car finance to mortgages. They always seem to find a way....

princeofpounds

Yet people with poor credit scores pay more for all sorts of things. From car finance to mortgages. They always seem to find a way....

True, but it is not the same thing. Can't get car finance, buy a smaller car (or none at all). Can't afford such a large mortgage, buy a smaller house...

... Or rent...

... But if you can't afford to rent the most basic property thanks to poor credit, what do you do? There isn't a possibility to economise further because it's a bare bone essential. It means homelessness (or falling back o the state)