There are around 11 million renters in Britain. As we discussed in our November article Pimp your credit score, renters have traditionally found difficulty in accessing credit for a mortgage, even when they have a history of being reliable rent-payers. Rent is often not included in credit scores and mortgage affordability assessments.
Following an announcement in the Chancellor’s Autumn Budget 2017, the government has invited the UK’s FinTech industry to take part in a competition to develop new applications designed to help renters. The app will enable renters to record and share their rent payment data to improve their chances of securing a mortgage.
The Rent Recognition Challenge invites developers to design an app that will help renters boost their credit score, so they can access credit and get on the housing ladder.
HM Treasury has made £2 million available for the Challenge. Winning bids will be selected by a panel of leading FinTech figures, and £100,000 of the funding will be split between the six most promising proposals to help them create a prototype product. Further funding will then be made available to the best three or four teams, to support them up to the launch of the successful product onto the market.
The Challenge was launched at the FinTech Connect Live conference in London on 6th December, by the Economic Secretary to the Treasury, Stephen Barclay. He said:
“People’s monthly rent is often their biggest expense, so it makes sense for it to be recognised when applying for a mortgage. Without a good credit score, getting a mortgage can be a real struggle. Most lenders and credit reference agencies are unable to take rental data into account, because they don’t have access to it. The Rent Recognition Challenge will challenge firms to develop an innovative solution to this problem and help to restore the dream of home ownership for a new generation.”
The competition opens in January 2018 and closes in March. The whole project will conclude in October.