The UK government is offering £2 million to fintech developers who come up with a tool that lets renters record and share their payment data.
The Rent Recognition Challenge, which was first announced as part of the chancellors’ autumn budget, will task developers with finding a way to record payment data from Britain’s 11 million renters in a bid to improve their credit scores and ultimately help them to get a mortgage.
“Most lenders and Credit Reference Agencies are unable to take rental data into account, because they don’t have access to it.
“The Rent Recognition Challenge will challenge firms to develop an innovative solution to this problem and help to restore the dream of home ownership for a new generation,” said the economic secretary to HM Treasury, Stephen Barclay.
The competition will provide an initial round of grant funding to six promising proposals to help turn their ideas into workable products.
A panel of leading figures from the Fintech sector will then whittle the six down to just a handful of teams who will receive further funding and support to bring their ideas to market.
“People’s monthly rent is often their biggest expense, so it makes sense for it to be recognised when applying for a mortgage. Without a good credit score, getting a mortgage can be a real struggle.”
The government’s attempt to help more people out of private renting arrangements and into home ownership comes after Scottish Widows published a report that warned tomorrow’s pensioners will have to find huge amounts of money to pay ever-escalating rents to private landlords.
Scottish Widows projected one in eight retirees will be renting by 2032, which works out to three times the number renting today. It also said there is a £43bn gap between the income and savings people have now and what the rent bill will be in retirement.
Speaking to the Guardian, Dan Wilson Craw of campaign group Generation Rent said: “The common perception is that retirees either own their home outright or have a council tenancy, so the government will be in for a nasty shock as more of us retire and continue to rent from a private landlord.
“Many renters relying on pensions will qualify for housing benefit which will put greater strain on the public finances.”
The Rent Recognition Challenge will open to applications early in the New Year, and development will conclude in October 2018.