Experian has found that one in three private tenants has put their plans to buy on hold and remained in rented accommodation longer than planned.
The firm’s survey of nearly 1,500 private renters in the UK suggests 1,655,680 tenants are frustrated first-time buyers.
18% of private tenants don’t believe they would be accepted for a mortgage so feel renting is their only option, while 10% have struggled to raise a deposit and consequently been forced to delay their plans to buy. A further 5% have had to prolong their time renting as they’ve been held up in securing a mortgage.
Experian claims that despite making regular payments for their housing, private renters don’t see this reflected on their credit report in the same way mortgage payers do. To help private renters to get a mortgage, access finance or prove their identity online, Experian has developed the Rental Exchange. It allows rental payment information to be submitted to Experian, which will help strengthen renters’ credit histories and ease their difficulties when they buy a home, it argues.
Experian’s Jonathan Westley said: “Many would-be first-time buyers face the challenge of saving for a deposit on a home while paying rent each month. While our research also shows that a significant amount of people are happy to rent in the long-term, whether it’s because they enjoy a good relationship with their landlord or the flexibility of rented accommodation.
“Yet the rent paid by tenants isn’t reflected on credit reports in the same way homeowners benefit from making regular mortgage payments. By adding this data through the Rental Exchange, people aiming to buy can build a stronger credit history to help them get a more competitive mortgage rate, while long-term renters can prove their identity when they apply for online services.”
25% of those surveyed intend to buy a place of their own sooner rather than later. 9% are currently saving for a deposit and believe they will be able to buy within the next 18 months, while 16% reckon they will need between two and five years to build up the required deposit. A third of private tenants are content to rent and have no plans to buy a home of their own in the next five years.
Would-be first-time buyers who have been frustrated in their attempts to get onto the housing ladder are more likely to be single parents or couples with children. These tenants either doubt they would get a mortgage or have had difficulty securing one, or have struggled to get a deposit together. Three-quarters of this group (74%) would like to see rental payments contribute to their credit report.
The greatest appetite for including rental payment data on credit reports is among people who are looking to buy in the next five years. 91% in this group, which includes many couples without dependent children, recognise the importance of a good credit report and 83% would like to see rental payment data added to it.
People who are happy to rent tend to live alone or only with other adults and are less likely to see rent as ‘dead money’ than private tenants as a whole. 26% of satisfied renters disagree when asked if renting is a waste of money, compared to 16% of all private renters.