Over the course of my twenty year career in financial services, I have kept a close eye on the changing face of the rental market in Britain and the increasing demand for properties available for let. That's why, it did not come as a surprise to me to hear that home ownership is falling in major English cities. Stories about millennials struggling to buy houses continue to dominate the media and the number of private renters has more than doubled since 2001 - this is projected to continue over the next decade. Articles along this theme leave no doubt in my mind that Generation Rent are here for the long-term.
Many reports blame steep rental prices as the sole issue millennials are facing. However, compounding the problem is that they are seemingly unaware of the wider impact renting could be having on their financial situation. In fact, recent Noddle research* found that two thirds of renters believe they will never own their own home so are putting off thinking about their finances as a result. Many are potentially being left high and dry when it comes to having access to financial products; not just mortgages but things like mobile phone contracts and car insurance, not to mention approval by letting agents to secure a rental property in the first place.
The research also found that over a third of renters have had an adverse financial experience while renting. Having deposits withheld when leaving a property or borrowing money from loved ones to be able to put down a deposit were high up on the list of negative experiences. One millennial, Cat Stevenson, 27, from London, told me that she had been renting privately for nine years and was financially in the position to purchase a property. However, when it came to it, she was unable to access her credit report and could not obtain a mortgage. She suspected it was most likely down to the fact that not enough credit information was held about her. She hadn't registered on the electoral roll at every rented address and utility bills were not in her name - this meant there was very limited information for the credit reference agencies to identify her. She explained it was stressful and frustrating having waited all that time to be in a position to buy a house and then come up against another hurdle.
When considering the current rental market, part of Cat's story is relatively rare owing to her being a in a position to buy; however, not having access to a credit report due to a limited credit history when she wanted to buy a property is not. That's why Noddle has joined forces with the University of Edinburgh Business School, the Chartered Institute of Housing and the campaigning group Generation Rent to produce a helpful guide for renters so they are not in the dark about their credit report. The guide details a number of helpful ways renters can take action towards shaping up their long-term financial health and in turn taking steps to improve their credit score. Below are a few tips taken from the guide.
1. Spring clean your financial track record
• Ensure you are on the electoral roll for your current property. Visit www.aboutmyvote.co.uk to find out how you can register online for where you live. As well as giving you the ability to vote, this is also a major piece of information used to identify you for financial reasons. It's really important to re-register on the electoral roll every time you move.
• Try to have a utility bill in your name at your current address. It makes it much easier to prove you live there when applying for any financial products.
2. Make sure you're not vulnerable to any traps
• When renting, it's easy to end up with financial 'links' to other people you live with - whether it's a partner, a friend or just someone you didn't previously know who you have happened to end up living with. Most frequently these links can come from having a joint account, even if it's just set up to pay bills.
• Once you are no longer living together ensure the account is closed and the link dissociated on your credit report so you minimise the risk of any future credit issues on their part affecting you.
3. Don't stick your head in the sand
• Noddle research showed that 12% of renters think their finances will improve by the time they have to worry about it. However, not building up a credit report now can cause problems further down the line. Start by looking on www.noddle.co.uk to check your credit rating and score (it's free).
* Survey carried out by Atomik Research. 1,002 people living in rented accommodation were surveyed online between 26th February and 4th March 2016.
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