Trudeau announces new measures to help renters

Here at home the Prime Minister announced new measures today aimed at helping renters Justin Trudeau was in Vancouver where tenants pay some of the highest rents in the country Trudeau said the government’s plan will give renters more credit for paying their rent on time every month and improve

Their chances of buying a home reality is young people are spending a huge amount of their income on rent and if you look at someone who pays a $2,000 mortgage they’re getting recognition and credit for that from the Bank as part of their credit score but if you’re paying $2,000 a month on

Rent that gives you no Kudos it gives you no credit it gives you no uh no recognition that you are working hard to meet your obligations and pay a sizable sum every month that’s why this change of making sure that the money you pay in rent every month is recognized as part of

Your reliability as part of your credit score will help you eventually unlock home ownership access a mortgage access borrowing and be able to build that future that we know you deserve part of today’s announcement included a promise to amend the Canadian mortgage Charter it would call on landlords Banks and credit bureaus to

Make sure you heard those words from the Prime Minister that rental history is taken into account in your credit score so to discuss what this means and how it could help level the playing field field for renders I want to welcome Scott Tero he is the manager of consumer insolvency

At Hoy michelos and Scott appreciate you coming in to talk to us thank you thanks very much Andrew so what do you make of this amendment again I I’ll just use some of the words that the Prime Minister and the Finance Minister used you know to sort of you know make sure

Call on working together with with banks so that renters uh rental record if you will paying their rents uh on time is taken into account when it comes to their credit score and maybe one day being able to buy a home or or get a

Mortgage to buy a home yeah a lot of um a lot of somewhat vague and Squishy words there I’m glad you pointed that out um I think a lot of this is going to come down to teeth and enforcement I noticed he said that they will call on

Landlords okay well what does that mean so hopefully what this does is it brings a bit of um a More Level Playing Field because frankly for the last decade or so there’s been become a great divide in this country between sort of homeowners and renters and a lot of renters have

Felt left behind and kind of falling through the cracks because yeah I mean I paid 2,000 a month for three four five six years I get no credit for doing so now uh hopefully this actually makes this a thing instead of just hoping that someone will do it because unfortunately

In this country when it comes to a lot of financial issues you know we talk a good game but we don’t necessarily Implement well so then what so you know we’re we’re just basing this on the language that we heard and the words that were used but from the language you

Heard do you feel as though there there is there is not the teeth that is needed or do you you or what do you think yeah I that’s my suspicion but when when you say you’re amending the mortgage Charter the Canadian mortgage Charter that sounds like it’s like it’s solid and so

I think what people need to realize is that this is very important to people who rent and you know everyone talks about okay you know we’d like everybody to be homeowners at some point and and you know we we had a housing boom in this country for a decade and it really

Changed the entire Financial landscape of the country without you know without sounding too uh extreme and so I mentioned the Divide between renters and homeowners renters really want to get this on board like up until now this has been voluntary okay so you can have your rent reported but it’s done through an

Agency called the landlord credit bureau which operates in the four Western provinces in Ontario and what happens is you make a voluntary arrangement with your landlord and the landlord reports your rent yes check check check you pay every month uh to the landlord credit bureau this agency and then the agency

Turns around and reports it uh in turn to the official credit reporting agencies Equifax TransUnion so so it it’s done indirectly and voluntarily so hopefully this turns this into a a solid and legitimate uh reporting reporting issue so that’s done voluntarily uh is there uptake or do do a lot of people

People put that information into that datab there’s not a ton of uptake to be honest um I mean it’s certainly there’s more uptake now because we’ve become you know ACC credit obsessed Society everybody wants to be homeowners uh and that sort of thing so I think if you

Looked at the at the numbers now versus five or 10 years ago it would be a great uptake but still not huge and so I think this needs to be more embedded I guess in the uh in the financial landscape in Canada and you know it has to have teeth

And I think then you would as the Prime Minister said you know enable people who want to become homeowners I mean this is a huge thing you know it’s first of all it’s a massive amount of your income per Mone you you don’t pay anything bigger

Than your rent if you’re a renter um so it’s important and it’s important to be recognized now there’s a flip side obviously if you miss payments you’re going to get dinged for it too so that’s the other side of it but I think people would readily agree to that and so we

Were just talking about you know what goes into a credit score cuz if uh you know if you’re a renter if you’re a younger person how is that even uh assessed so credit scores are this you know this magical three-digit number and it’s created by five inputs or elements

And each of them has a weight by percentage and payment history which is what we’re talking about here is actually the highest weight it’s about 35% depending which which Bureau you’re talking about or which bank you’re talking about um and so it’s pretty major I mean if you’re if 35% of your

Three-digit magical score is based on payments you make and now all of a sudden you’ve got 12 24 36 months behind you and making rent payments it’s going to make a big difference to your credit score and to your ability to to borrow down the road so okay so we don’t know

Whether there’s going to be enforcement of this we just base it on what what we’ve heard today do you think there’s social pressure on uh Banks and lenders to kind of say hey wait a second maybe the government has a point here there are a lot of people feeling that

Pressure they do want their rent there some acknowledgement of of of of their rent yeah uh do you think that could be enough of an an incentive well there’s certainly been social pressure on this issue yeah I mean a lot of a lot of renters groups have been pushing for

This kind of thing for a long time but also I think from a financial standpoint it’s in the interest of the banks because if you’re more credit worthy I can lend to you right and so you know we just saw recently that they’re going to change the you make make pretty big

Changes to the um you know how much you can borrow for a mortgage basically the r and so okay well that means people better have you know that much better credit scores because it’s going to be harder to get a mortgage in some senses and so but I think the banks should be

On board with this because you know what it’s a it’s a trustworthy um history of payments it’s rent you know it’s it’s obviously uh cleared by the credit bureaus and it’s a substantial thing upon which to lend so you know and that’s how Banks make money

So I think for for the bank standpoint it’s also a financially uh a very sound thing so you like it from both sides from both the banks and yeah and like you said earlier unless there’s more to it we’re only going on you know a few sentences of

Spoken two hours ago or whatever but like you know it’s a step in the right direction if that’s the intention and just uh quickly longer term how do you think this could address the housing and affordability crisis well it doesn’t help Supply you know and so that’s you

Know that’s some a separate interview okay but but you know it it certainly helps you know the the the borrower side of things in the sense that you know more people can get in now does that make things works because now more people can borrow maybe it does in a way

But um you have to have people able to fall back on you know their credit history in order to borrow and then I think you have to address the supply issue separately like this is not going to fix the supply issue but it’s going to make things more fair between

Homeowners and renters I think you’re right Scott we could uh spend many more minutes uh talking call me again about all that we will uh appreciate that credit counsel Scott Tero here in Toronto

Prime Minister Justin Trudeau announced a plan that will give renters credit for paying their rent on time every month and improve their chances of buying a home. Scott Terrio, a consumer insolvency manager discusses the announcement and how this can help renters in Canada.

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