Baroness Olly Grender writes…Give renters fair access to affordable credit #makerentcount

Creditworthiness, yet another poverty gap issue, is one that could be so easily closed.

You’ve paid your rent all your life in full on time. You go online to buy a washing machine. You fill in your credit details. But because you’re renting in social housing, that washing machine will cost you somewhere between £300 and almost £1,000 more than someone with a mortgage.

Over two thirds of renters, in private and social housing, pay their rent. Renters are often managing bills, juggling finances and paying a far higher proportion for their housing costs than many owner-occupiers.

Last week, The Big Issue’s John Bird introduced a Bill to make this fairer. It will mean that rent paid in the past, and council tax, will be included when someone applies for credit. It will ensure that renters have as much of a digital identity as owner-occupiers. It will make rent count.

A version of this scheme has already been set up by Big Issue Invest by using rental data. This brilliant project, the Rental Exchange, is transforming credit freedoms. In almost 80% of cases, tenants can gain an improved credit score when rent data is shared, and the evidence also shows a jump from 39% to 84% in digital identity authentication when rent data is included in credit files.

Fairness for renters was the reason for my Renters Rights Bill last year, which focused particularly on banning tenancy fees to lettings agents. Many Lib Dems got behind it and, thanks to our successful campaign, it’s now a Government Bill.

By 2021, nearly one in four of us will be renters, still paying the poverty premium, currently an additional £1,300 for the basics of energy, phones, white goods and furniture. But people living in poverty must not be forgotten about. The financial system drives renters into the arms of the most unscrupulous lenders, which, in turn, drives a vicious cycle of poverty.

The arguments by the Government on Friday were no great surprise: “leave it to the market”, “more regulation means a greater burden on lenders, landlords or credit reference agencies”. The same arguments used against my Bill last year, on which the Government later, and rightly, changed its mind. So it can again with this excellent campaign.

John Bird’s Bill is building a head of steam in Westminster. With Lib Dem, and other parties’ support, it’s paving the way for fairer access to more affordable credit. Show your support by helping spread the word about The Big Issue’s campaign on Facebook or via Twitter. Let’s #makerentcount.

* Olly Grender is a Liberal Democrat member of the House of Lords

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3 Comments

  • Dean Crofts 30th Nov '17 - 7:52am

    I would prefer if we were to promote financial education among everyone to save, rather than rely on credit for white goods etc. If a person can afford credit, and affordability is usually the reason why they go to expensive lenders – proven before payday loans were regulated – then a habit of using part of their income to save what disposable income they have, would enable everyone to buy a replacement good and not pay interest at all. It would also start the small step of our society not relying on debt to survive.

  • Nonconformistradical 30th Nov '17 - 9:11am

    Dean is absolutely right. Seems to me our secondary education system is failing if the vast majority of teenagers leave school without being properly equipped to understand the basics of managing personal and household finances – basic budgeting, impact of interest rates etc.

    And since the Trussell Trust has moved on from its original scheme involving Martin Lewis to https://www.trusselltrust.org/what-we-do/more-than-food/money-life/ – I think there is a definite need for such help.

    No point in enabling people to borrow more easily without their being able to manage their finances properly.

  • I don’t think we should case judgement on people who need to borrow for expensive, essential goods like a washing machine or cooker if they need replacing – especially in an age where living standards are falling and low pay and zero hours contracts are widespread. It may take a long time to save up for these items whilst relying on the even more expensive option of launderettes or (also unhealthy) takeaway meals. The bill is to help people who manage well with their finances but are unfairly discriminated because they rent rather than own. It deserves our support.

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