Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
The Daily PollTOMORROW, A BILL is to be launched in the UK House of Lords (by Lord John Bird, founder of the Big Issue magazine) in an attempt to have a person’s rental records included amongst the criteria used to assess their credit score.
The thinking behind the bill is that UK citizens with perfect rental records are being subjected to more punitive repayment schemes for goods than those who own their own home.
In theory, the bill could see long-term renters rewarded for their years of rental payments in terms of a mortgage application, for example.
When applying for a mortgage in Ireland, meanwhile, generally a person’s previous six months of bank statements are taken into account to assess their suitability for a loan.
However, the amount that an Irish bank will actually lend is governed by the Central Bank’s mortgage rules – which sees an aspiring borrower limited to a loan 3.5 times the size of their gross income.
But should a person’s rental history be justification for granting a larger mortgage?
We’re asking: Should a person’s rental history help them to get a larger mortgage?
To embed this post, copy the code below on your site
No because that ramps up house prices. Better to have rent to buy and you don’t need a deposit
@Kevin Slater: Thejournal is subsidy of daft.ie. Their job is pump property prices up and make us all to pay.
@cortisola: AKA developer.ie
@Kevin Slater: The rational for a deposit is sound. It’s there to take care of minor fluctuations in prices to avoid negative equity should u need to liquidate expediently. These days with the boom bust cycle that’s being promoted chances are u’d loose ur shirt as well.
@Melissa O’Callaghan: Some of the crazy figures they put on houses on that site are gas. They’d one particular house a friend of mine had an eye on at the top of Patrick’s Hill in Cork… Right up until it was sold the site had it up for 750k… Even in the middle of a housing crisis it closed for 475k… Sites like that deliberately create a sense of panic in the market and as the owners are heavily involved it’s almost akin to a stock market practice called “pump and dump” where stock prices are artificially inflated through misinformation then sold rapidly before unsuspecting buyers find out it’s close to junk…
@cortisola: unless I’m mistaken daft charge a fixed rate for placing an advert. Be it avg asking price €200k or €600k daft get a fixed price not commission so there they don’t care prices as long as market it moving. When people throw about random remarks without fact they loose the argument basis and belief.
Their fee structure below.
@Jason: Your comment makes no sense. Nothing on Patricks Hill closed for 475k at any time since before 2010. There are however a number of properties that closed at the 500k-600k bracket. The only reference I can find to a 750k property was at the height of the boom in 2006 and that didnt sell. Asking prices are just that and in this day and age of the price register, I dont think you are giving buyers enough credit. They know exactly what something in an area is going for….
I’m sick of paying the value of two mortgages in rent where the bank wouldn’t take it for granted I could pay half that on a mortgage successfully. I get that this needs to go hand in hand with an increased supply of houses for sale. So I’m thinking high-rise high end apartments are needed close to the city centre so that we clear the young professionals out of the suburbs where they probably don’t really want to be.
@David Lacey: I was thinking Dublin when I wrote that but it works for all the cities.
@David Lacey: hear hear.my rental history proves I could easily pay a mortgage. But as I’m paying so much rent I haven’t a hope to save a deposit. rock and hard place.
@David Lacey: ok so you fill up the business centre with residential. Where does the business go? I’m assuming the plan to create land is the only option. You are solving a problem with a problem. How about improve public transport, especially creating access to areas where there is lower demand for land.
@Melissa O’Callaghan: I pass a lot of land banks on the way to work. They are surrounded by residential areas but still central. The big site by the four courts on the left of the Luas tracks heading away from town for example. Also, losing a few four floor building for a while and replacing them with larger building would be another option.
Melissa, you can build business districts outside the city. City West for example. Adamstown is already there as is Parkwest. Decentralise
@Kevin Slater: Companies in these places have a problem recruiting people. If you live in North Dublin getting to Parkwest requires a long commute time regardless of mode of transport. I don’t even consider going for the interviews. Same with people going to Eastpoint from the Southside and that is a lot closer to the city centre.
@Kal Ipers: ive worked in parkwest and yes by train its 2.5 hours but by car 30 minutes or so. infrastructure is key. look at london. even of we dont decentralise but improve transport it works.
also yes rent should be taken into account, but there is a lot to be said for deposits. it lowers the banks and therefore the risk to the wider economy.
Another excuse to drive up prices. Only solution is to increase supply of housing that isn’t a 3 bed semi detached.
@B Ó Raghallaigh: Which, most people dont want. The vast majority of themarket is first time buyers and they generally want three bed semis.
The UK budget has put forward plans to cut stamp duty for first time buyers of new and s/h houses up to £300k. Ireland should do the same.
@Chris Kirk: I would also favour this nonsense approach of missing a few mortgage payments means a default or a hammered credit rating to task. This new world we are in means jobs are transient and very few jobs or life exist these days. Lending institutions need to reflect that new reality as do credit rating systems.
@Chris Kirk: Stamp duty is very small now and not an issue. It was basically removed and changed to LPT. Which should be a council tax for the person living there as opposed to a charge property owner. Another one of these “favours” the government did for landlords
@Kal Ipers: In Ireland there is no stamp duty on new houses for first time buyers, but then there aren’t many affordable new houses being built these days. They need to remove the stamp duty on s/h houses also.
@Kal Ipers: I will take that 1% if you don’t want it in your pocket. Fúúúckin hell. Should be removed it’s double taxation, we pay Property Tax now, god forbid a tax for owning a property, like a fúúúcking window tax. Jesus.
@OnTheOutside: It used to be 6%+ dependant on the property price. It certainly was double taxation then when I paid €22k and 6 years later getting a LPT charge.
The reason for LPT instead of council tax was a complete fudge. It is for local service for the resident and was what was meant to be done but the government knew it would be too difficult so they added to a landlord’s cost instead.
In theory, yes it should be taken into consideration when applying for a mortgage, or be used to offset some of the deposit required, but all that is of no use if there are no houses to buy in the first place. Tackle the supply first, then bring in new rules regarding mortgages.
This would over inflate the market considerably
No it shouldn’t. It should be based on income. Just because you have a good rental history does not mean that you can afford to leave beyond your means with a larger mortgage
@Brendan O Sullivan: They already check your rental expenditure and ability to pay it.
@Niall Sullivan: they do and their shite
@Brendan O Sullivan: So you can pay rent of €1600 and have no ability to pay mortgage of €1200? Ridiculous. If you can prove you paid you rent for the last few years and the amount you were paying it should be taken into account.
The truth is most banks will have there own weird calculations how much you family should spend a month and simply don’t consider you’re spending far less that what they include in the assessment.
hang on a sec you would be at the mercy of a landlord, if your relationship was not great, you could be in trouble. If you had a argument over a damaged item or deposit, they could say you did not pay your rent in total, that’s a crap idea, most landlords are great but like every section of the population some are extremely dodgy.
@Dáithí Ó Raghallaigh: or you can produce a bank statement showing you paid?
@Let free speech live: some landlords still insist on going to the property to collect rent , were you sharing a property with say five other and one skipped his/her rent for weeks, its detrimental to you you pay his/her rent or you get a bad credit rating.
@Dáithí Ó Raghallaigh: Every landlord should issue a rent book so as to confirm a tenants payments.
@Patabake Kennedy: we know that’s not always happening, we know people are topping up rent allowance with cash payments to stay in their rented homes.
@Dáithí Ó Raghallaigh: Say if that is all true about the tenant? They didn’t pay all their rent or on time shouldn’t the bank know. If a landlord says something that is not true they are liable for deformation and can also be sued by the bank if they lie about a bad tenant.
Who is going to pay the landlord for their time filling out this legal liability and risk?
@Dáithí Ó Raghallaigh: If you are paying cash to the landlord the banks won’t care what you say they don’t count it. When I went to my financial advisor a few years ago the first thing he said was pay rent through the bank and if the landlord won’t do that move somewhere else. Banks want to see the payments coming out of your account.
it is taking into consideration to a point as in the bank can see you can afford X amount already a month and save Y amount. It should be based on your income though. But fix the basics first(more houses) before bringing in new rules
Why get a larger mortgage the banks would love that, ,think about the pressure of paying for it for the next 25 years not to mention heating and cleaning it, build a smaller house, and people should cut their cloth to their measure, no matter how big the house one day it will only have 2 or even 1 person living in it, when the kids have flown the nest!!
@Jim Harrington: People need to get into the concept of downsizing as they get older. I live in an estate with very low occupancy as most residents are older. Yet the estate is well serviced for families with children. The house next door went from one person living there to 4 adults and a child when the owner died.
Very poorly written question. Why would rent justify a larger mortgage? Rent is already included in mortgage applications but there’s absolutely zero reasons to suggest why it should help you get a “larger” mortgage. Back to 100% mortgages because that worked out so well last time.
It should be taken into account not necessarily for a larger mortgage look what happen before have we all forgotten . F/F an the Banks along with Labour
It should certainly stand to the application in a positive way to show proof of past payments and ability to repay mortgage.
No because this would raise house prices however ability to have paid extortionate rents for a number of years should negate the need for a substantial deposit.
fantastic idea
@frank sullivan:
fantastic for the developers alright.
Private banks should not be able to create currency via debt, 97% of so called money only exists on a computer screen.
No.
Strict regulation of the housing market (via government intervention) to ensure that there is an adequate supply of affordable homes to purchase or rent is what is needed.
The market is not going to resolve our housing humanitarian disaster.
Then again FG hates Ireland so this will continue.
FG/FF/LAB are the enemies of Ireland and the enemies of the younger generation.
@Colin Morris: Won’t and can’t happen under EU rules.
Very sloppy conflation of ideas there, Journal. Assessing a person’s credit rating for the purposes of hire purchase agreements has nothing to do with giving a larger mortgage based on rental payment history (which as previous commenters have pointed out, is a silly idea anyway).
there are two sides to this, one makes sense and the other is debatable…
1. If a person pays 1,000 a month on rent and saves 1,000 a month towards a deposit then the deposit a person would have is less then they would have had without having to pay rent as well and this should be taken into consideration to allow a person obtain a higher percentage of the purchase price then someone who has saved 1,000 a month but has no other expenses – so the cap should be adjustable depending upon rental history
2. A limit based upon income should remain however and this should not be affected by rental history as ones ability to repay a mortgage based upon income and not previous history.
So, depending upon how one views the question – one can reach a different conclusion, but I am against anything that causes house price inflation.
Giving out ‘larger’ mortgages will lead us down a path that caused us considerable pain in the recent past. A cap of 85% LTV is reasonable and must be maintained
have your say