Three start-ups which acknowledge that tenants who pay rent on time should be able to build their credit rating for mortgage approval purposes are to share a pot of taxpayer money to help them develop their products.

CreditLadder, Bud, and RentalStep have each won a share of the 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 £2m 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 will now receive the remaining £1.4m  taxpayer funding. Canopy, Movem and FirstHomecoach were among the original six.

The three now getting the bulk of the funding are:

1. Bud: Bud is building an artificial intelligence 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.