Tech firms win prize to help UK's renters onto the housing ladder
Renters unable to get a mortgage because of their lack of a credit rating will be able to boost their chances through one of three new start-ups backed by the government
• Rent is not routinely recognised in credit scores, making it harder for renters to get a mortgage
• A share of £2 million of government funding has been awarded to three innovative start-ups with a solution
• The winners offer apps for renters to record and share their rent payment data, helping boost their credit score
Renters unable to get a mortgage because of their lack of a credit rating will be able to boost their chances through one of three new start-ups backed by the government today (15 August 2018).
CreditLadder, Bud, and RentalStep have each won a share of a £2 million prize fund, as part of the government’s Rent Recognition Challenge. The Dragons’ Den style challenge tasked entrepreneurs to create a simple way for renters to record and share their rent payment data, to help them improve their credit score. The three winners will use their funding to further develop their businesses.
John Glen, Economic Secretary to the Treasury said:
"Monthly rent is often the biggest expense that people face. Yet most lenders are unable to take it into account when working up a credit score. Three pioneering start-ups have found a solution, and we’re giving them the investment and support they need to help millions of renters across the country achieve their dream of owning a home."
Launched in December 2017, the Rent Recognition Challenge provided an initial round of grant funding to six budding businesses to help turn their ideas into a workable product. An expert panel of judges then whittled the six down to three, who today receive a final package of government funding.
Charlotte Crosswell, CEO of Innovate Finance and one of the challenge’s judges said:
• We are delighted to support the Rent Recognition Challenge and address this important issue of helping renters as they look to establish a credit history, helping their journey towards securing a mortgage in the future. The Fintech sector has proven it can provide credible, innovative solutions and we are delighted that government has recognised that Fintech companies have a significant role to play in this market.•
• Currently, a history of meeting rent payments is not routinely recognised in credit scores, and is not commonly considered when banks conduct mortgage affordability assessments - creating a barrier to getting onto the housing ladder
• The three winning start-ups are:
1. Bud: Bud is building an AI driven rental recognition tool. It will allow banks to integrate it into their apps so that people can use their rental history to help them do things like apply for a mortgage.
2. CreditLadder: CreditLadder allows tenants to report their rent payments. Landlords and Letting Agents can also introduce their tenants to the platform.
3. RentalStep: RentalStep is a landlord-tenant matching platform, which allows landlords to purchase a tenancy management service through the platform, and rental payments to be tracked and reported.