Renting becoming more popular as mortgage lending drops again

Posted in 'Mortgages' by Richard Catlin

25 November 2010

With mortgages still hard to come by, particularly in the absence of a hefty deposit, more and more of us are choosing to rent rather than buy.

The UK mortgage market remains tough - especially for first time buyers - with approvals falling to their lowest level for 18 months in October according to the latest figures from the British Bankers Association (BBA).

Although the overall number of mortgages being approved has fallen, the buy-to-let market - buoyed by the number of people looking to rent - shows signs of recovery, with lending up 12% in the third quarter of 2010.

With demand outstripping supply, rents have increased for 9 consecutive months, reaching an average of £691 – with predictions that the trend will continue into 2011. There are even reports of competition for some properties being so intense that prospective tenants are forced to submit sealed bids to determine who is prepared to pay most for it – a practice typically reserved for home purchasing.

Despite the increase in the number of people renting, and the rising cost of doing so, tenant arrears actually fell for the second consecutive month in October – dropping from £229m in September to £221m.

All this increased competition means that landlords can afford to be slightly pickier over who they accept as a tenant. With that in mind, renters should be aware of what information will be checked when applying for a tenancy.

In contrast to the type of credit check that lenders carry out when you apply for a mortgage, loan or credit card, landlords are only permitted to see a subset of data, known as your public file. The main components of this are your presence (or absence) on the electoral roll and any court information registered against you over the last six years such as judgments and insolvencies.

This is the same type of credit check that some employers will carry out against both prospective and existing employees. It’s a legal requirement to monitor the credit files of employees working in financial services, but many other organisations are starting to credit check job applicants, including the police force.

Our Free Multi Agency Agency Credit Report allows you to view and compare both your public and private credit files, and see what lenders, landlords and employers are able to see. The report based on Experian data will show you what landlords, most small lenders and some employers are able to see. The report based on Equifax data will show you the data lenders use to assess any application for credit you make. Finally, the report based on Callcredit goes beyond what lenders are able to see, including amongst other things the lender names and also how your balances and limits have changed over the last 6 years. You can try Multi Agency Credit Report Monitoring completely free for 30 days, with no obligation. After the trial, the service costs just £9.99 a month - the best value in the UK.

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