Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect on tenant credit scores of rent arrears that have accumulated since covid- 19 lockdown measures started in March 2020.

Rental payments are not typically recorded on an individual’s credit file.

However, the Government identified that rental data could be used to contribute to the overall picture of a tenant’s financial position if it were recorded and shared in the same way as other credit payments.

That is why in 2018 the Government launched the Rent Recognition Challenge. This £2 million prize fund challenged firms to develop applications that enable rental tenants to record and share their rental payment data with lenders and credit reference agencies (CRAs) with the aim to help them boost their credit scores, access credit and get on the housing ladder.

The three winners of the challenge, CreditLadder, Bud and RentalStep, are now all using technology to verify and record tenants’ rental payments, which includes apps for borrowers to download and use. Since launching their rent recognition service, CreditLadder has recorded more than £250 million in users’ rental payments and Bud continue to work with large lenders such as HSBC.

Where a tenant who has chosen to have their rental payment data shared with a credit reference agency is in arrears, it could have a negative impact on their credit history and may restrict them from gaining access to credit in the future.

To ensure renters can continue to afford their housing costs during the COVID-19 pandemic, the Government has put in place an unprecedented package of support. These measures include increasing Universal Credit and Working Tax Credit and a significant investment in the Local Housing Allowance (LHA) of nearly £1 billion this financial year. For those who require additional support, Discretionary Housing Payments funding is available.