A prominent PropTech startup is questioning whether long-term tenants need to go through the traditional referencing process when moving between rental properties - especially when the ban on agents’ fees comes into effect next year.
RentalStep - one of winners of HM Treasury's Rent Recognition Challenge, seeking a digital solution to how to allow tenants’ payment records to contribute to their creditworthiness - says the lettings industry needs to provide a more streamlined and suitable process for renters and landlords as the private rental sector expands.
It cites the most recent English Housing Survey estimating private renting to account for a fifth of all households in England and becoming the largest tenure in London.
Meanwhile research by Your Move indicates that around a third of current tenants have already rented for six years or more and new Housing Secretary James Brokenshire’s announcement that the government will soon be consulting on options to support landlords who want to offer longer tenancies.
"With many tenants now renting privately for 10 years or longer, they have the opportunity to build up a comprehensive rental history" says Mike Georgeson, founder and chief executive of RentalStep.
"It therefore seems logical that all this information is stored in one central place and that tenants and landlords don't have to undertake a lengthy, admin-heavy and sometimes expensive traditional referencing process every time someone wants to move home.
"If tenants are renting for the long-term but moving around frequently to experience different locations, there shouldn't be a need for them to constantly resubmit the same information."
RentalStep says its TenantPassport product produces a digital rental history profile including property, employment and reference information which can be shared with landlords and letting agents, as well as allowing payment history to contribute towards a credit score.
"The cost of referencing prospective tenants is something all landlords need to consider" says Georgeson.
"From next year, it will no longer be possible to charge tenants upfront fees and it's widely expected that the cost of the traditional referencing process will fall to landlords [who] must adapt and think about their own costs and whether it makes sense to pay a fee each time a tenant needs referencing" he says.