Two years ago, the Competition and Markets Authority (CMA) ordered the nine largest UK current account providers to open up their data for the new Open Banking initiative.
This regulation has led to the release of financial data from the banks’ ownership and into the hands of consumers. It is hoped that approved third parties, such as budgeting and savings apps, can ‘plug in’and access the information, in a secure and standardised way, to help people improve the way they manage their finances.
Many landlords may be unaware that thanks to Open Banking, tenants can now automatically verify income and past rental payments and share this data. Currently there are 15 million renters in the UK market who move every 12-18 months and each time, they need to secure a new reference. Historically, this comes from a starting place of ‘I don’t trust you’. The current referencing system is extremely invasive, stressful and time-consuming for tenants.
Innovative technologies such as Rental Passports,which access Open Banking data, can provide proof of an individual’s rental and credit history and their ability to pay rent promptly, so that landlords know immediately if a tenant is suitable for a property.
Rental passports give tenants control in the application process, offering them a portable, digital rental identity which help them to improve their credit score. They also can reduce the back-office costs historically associated with the screening of prospective tenants and reduce the risk of rental arrears.This facilitates a trust-based relationship between all parties involved and helps‘Generation Rent’ build better credit score which would help with improved access to financial products including, getting on the property ladder.
Tenant referencing can be eradicated with thelatest, sophisticated fintech products, which can also bring huge improvementsto the rental application and management process, making it a quicker andsmoother experience for Letting agents, Landlords and Tenants. Eliminatingtenant referencing costs is a first step towards that goal. Canopy is one suchprovider in the market which offers free instant, Experian and Open bankingdata based referencing to Letting Agents and Landlords.
The industry needs to come together and build arental ecosystem that will help millions of renters to achieve better rentaland financial health. It is vital that we connect the disparate strands ofrental housing journey into a seamless process. We need to look past pure profit maximisation and consider the biggerpicture of building a better and more inclusive rental society.