Property marketplace TheHouseShop.com have announced the launch of a new smart rent collection service in partnership with Experian. The new service will be the first to give UK landlords the same power as large financial institutions to incentivise on-time payments from their tenants.
Rent arrears cost UK landlords over £900 million annually and worries over late or missed payments are often cited as one of the most stressful parts of being a landlord. Part of the problem for landlords is that rent payments often fall behind other outgoings, such as utility bills or credit card payments, in the list of tenant’s financial priorities. This is because, unlike most other regular monthly payments, rental payments are not reflected on a tenant’s credit history.
Tenants, therefore, have no incentive to ensure they pay on time and in full, as they will not be negatively impacted in the same way they would should they fail to pay their electricity bill.
With the increasing importance of credit scores in modern financial life, tenant’s priorities are usually focused on factors that can either improve or damage their credit file – leaving rent payments at the bottom of the list.
Until recently, private landlords have been unable to do anything to address this imbalance in financial priorities. But a new smart rent collection service is about to change all that and give landlords the same power as the large financial institutions for the very first time.
RentScore, in partnership with Experian, is a cost-effective rent collection service powered by property marketplace TheHouseShop.com and is available to all private landlords in the UK. RentScore sets up Direct Debit payments from tenants, much like any other rent collection service, but crucially it also registers rental payment data with Experian’s Rental Exchange, reflecting late or missed payments on the tenant’s credit reports.
The fact that a tenant’s rent payment will now impact their credit score, in the same way as other significant outgoings, will force tenants to make rent a top priority.
Part of the beauty of the service is that it is not just the landlord who can benefit from using RentScore. Good tenants who reliably pay their rent on time each month, will build up positive data on their credit histories and put themselves in a stronger position to apply for mortgages and secure the best rates on other financial products and services. Currently, tenants receive no benefit to their credit report for paying their rent on time, despite the fact that mortgage-holders have seen their credit files improve month after month for making an almost identical payment.
A recent YouGov survey commissioned by TheHouseShop found that almost three quarters of Brits (72 per cent excluding “don’t know”s) believe that rent payments should count towards a persons credit score. In fact, rent payments ranked slightly higher than utility bills, despite the fact that only the latter is currently included in credit scoring algorithms.
Nick Marr, co-founder of TheHouseShop, explains why RentScore is a win-win for both tenants and landlords:
“All landlords worry about their rental income, especially if they have a Buy To Let mortgage that needs paying every month regardless of whether their tenant has paid or not! Dealing with the hassle of rent collection and chasing payments can be a major cause of stress for a landlord, so anything we could do to minimise that pressure was going to be popular.”
“Our partnership with Experian and the Rental Exchange has allowed us to offer a smart rent collection service that goes above and beyond to help minimise the risk of late or missed payments. From the tenant’s perspective, RentScore acts as both the carrot and the stick – giving them the chance to improve their credit reports if they pay on time, but adding the risk of negatively impacting their credit file if they don’t. So, it really is a win-win for both parties.”
RentScore is available to any landlord in the UK, with prices starting from just £9.99 per month. To learn more about how the service works, check out the RentScore page on TheHouseShop website here: www.thehouseshop.com/rentscore