Rent recognition provider CreditLadder is set to introduce two services that will allow letting agents and landlords to automatically collect and distribute rent payments, after receiving regulatory approval from the Financial Conduct Authority.
CreditLadder has been authorised as a payment institute, which gives it powers to organise and take rental payments from a tenant’s account on behalf of a landlord or letting agent.
Currently it records when a payment is made and informs Experian to boost a tenant’s credit score, but CreditLadder’s new regulatory authorisation means it will be able to organise and request rental payments from a renter’s bank account on behalf of the 2,500 lettings agents it works for.
A tenant will have given permission by signing a standing order allowing a specific amount of rent to be taken, and CreditLadder is developing products that will then ensure rent is collected on time and distributed to the right people as well as being recorded on a tenant’s credit report.
Sheraz Dar, chief executive of CreditLadder, said: “Winning FCA approval is a huge step forward for CreditLadder because it significantly widens the range of services we can offer tenants and underlines to them as well as commercial partners and investors the integrity of our platform.”
It’s daft.
Why would any tenant want this? Despite being on a credit report it has no basis on obtaining a mortgage.
Secondly if they can report a payment has been made they can report when it’s late or missed.
At present if a tenant is late or misses a payment it’s just the reference which is effected. Now it will be their credit score.
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I have had a couple request it, but did not agree to it.
Some concerns that come to mind:-
What would be the delay before we receive it?
By CreditLadder receiving the payment, it would constitute receipt of rent even though the landlord has not received it.
What if the tenant fell into arrears and paid outstanding amount direct to agent, would CreditLadder show as a late payment or no payment?
I can foresee complications with regard to pursuing Section 8 Ground 8 Notices.
Why would the landlord want to pay for such a service?
What if CreditLadder went bust?
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Wait what? This is complicating a simple process just because its technically possible.
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Will they offer a free rent collection by direct debit service for landlords, if so I would choose to use it, otherwise way should they get the data for free?
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Firms do not ‘win’ regulatory approval…
They make application, pay and fee and become authorised and regulated – in this case by the FCA under PSD2.
This is like saying that by passing the driving test, one wins approval from the DVLA…
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Whilst I wouldn’t necessarily use a third party firm to collect rent, the idea of being able to record rent payments with the credit reference bureaus I think is a great idea and something that needs to be adopted by ALL letting agencies. For the savvy renter it is all to easy to circumvent landlord/LA references and get accepted on a property.
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As a landlord, I wouldn’t accept rental payment going through a third party. If the tenant wants their rent added to their credit file, they can get it done using the Experian Rental Exchange (www.experian.co.uk/rental-exchange.html). This doesn’t need the landlord/agent to be involved.
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