UK Markets open in 6 hrs 49 mins

Renters who pay up on time 'unfairly treated' by mortgage credit checks

The housing market is stacked against solid renters, campaigner say (Getty Images)

Tenants who pay their rent on time are being treated unfairly by the mortgage application system, MPs are to be told.

At the moment, lenders cannot take into account the history of making monthly rental payments as proof an applicant could meet mortgage commitments.

This, MPs will hear on Monday, means they are at a serious disadvantage when trying to get on to the housing ladder.

MORE: Row of derelict garages transformed into 10 ultra-luxurious mansions worth £120 million

A petition, signed by 147,307 people, argued that “paying rent on time [should] be recognised as evidence that mortgage repayments can be met”.

Campaigners believe the current system is unfairly stacked at those “trapped” in the rental sector who show they can keep their finances on track.

Steve Burrows is the managing director of LateRent and Landlord Secure, a company which offers a free service allowing landlords to report payment history to credit reference agencies so tenants who pay on time can build up a good credit history.

MORE: Gazumping could be banned by Govt to cut ‘stress’ of buying a house

He said: “It is no secret that owning a property has become a distant prospect for many and the private rental sector continues to grow as a result.

“It’s therefore oddly out of step that tenants are unable to utilise rental payments as part of their credit profile – particularly as the government increasingly seeks to promote homeownership across the UK.”

Burrows added that is was a source of “rising frustration amongst renters”.

“Clearly, it’s time for the government to sit up and listen to this often-overlooked market, and stop simply paying lip service to their own housing policies,” he said.

Conservative MP Paul Scully will introduce and lead the debate on Monday.  “It is clear that in many cases if someone is renting, they can afford the equivalent mortgage,” he said.

MORE: Online estate agent Nested nets £36m from venture capitalists

Research from Landlord Secure has shown that 46% of landlords in the UK would refuse an application from a new tenant with a poor credit history.

However, credit histories do not form part of regular checks for new tenants, despite them giving a better picture of how an applicant has dealt with making payments in the past.