Open Banking for Rental Agreement Reference

[bunchofkeys]

Question for people that have taken up a new rental recently. Hopefully you can shed some light on this Open Banking scheme.

I've just put an offer in for a house, which has been accepted by the landlord.
Paid the holding deposit and now progressing through the reference checks.
However, it seems that the estate agent uses a company that wants access to my bank account, through the Open Bank scheme. I never heard of this.
I've not had to be referenced checked for a rental for many years, the last time I went through checks I just needed to supply some bank statements and my ID.
So, how safe is this Open Bank scheme, they want to see affordability. How much access do they have?
Thanks

[mrmistoffelees]

It's basically the same as providing bank statements in that they can see incoming and outgoings, but means that you can't for instance redact them, change them or withhold a page and so on. It's read only.

[TownIdiot]

In theory it's safer as it's a one off snapshot and they receive categorised information rather than a list of transactions.

It doesn't work for all banks and in all situations and my understanding is it's a once only access that you control from your banking app.

[NDA]

My son is renting and had this situation come up recently - I am his guarantor and the rental company wanted access to my accounts.

I refused and paid the whole 12 months for him, which he will pay back monthly. Obviously not practical for everyone - but the rental guarantee company had awful reviews and I really didn't want them having any access.

[TownIdiot]

NDA said:

My son is renting and had this situation come up recently - I am his guarantor and the rental company wanted access to my accounts.

I refused and paid the whole 12 months for him, which he will pay back monthly. Obviously not practical for everyone - but the rental guarantee company had awful reviews and I really didn't want them having any access.

That's interesting as we tried the same and they wouldn't allow it.
I wouldn't mind so much if the landlord was renting out a showhome but it's a stbox in Clapham and for the rent he's charging he should be prepared to take some risk on.

[MadCaptainJack]

mrmistoffelees said:

It's read only.

Be careful!

Open Banking allows for a Payment Initiation Services Provider to requesr a payment on the account holder’s behalf, which their bank then presents to the customer (e.g. through their banking app) for authorisation.

I recommend that the OP read this website - https://www.openbanking.org.uk/what-is-open-bankin... - and speak with their bank if they’re not entirely comfortable.

[mrmistoffelees]

MadCaptainJack said:

e careful!

Open Banking allows for a Payment Initiation Services Provider to requesr a payment on the account holder’s behalf, which their bank then presents to the customer (e.g. through their banking app) for authorisation.

I recommend that the OP read this website - https://www.openbanking.org.uk/what-is-open-bankin... - and speak with their bank if they’re not entirely comfortable.

Fair to point that out - should've clarified. I meant more that it's not akin to logging into your internet banking account, giving it to the estate agent and walking away. There's still, as you say, auth required to do anything useful.

[bunchofkeys]

MadCaptainJack said:

mrmistoffelees said:

It's read only.

Be careful!

Open Banking allows for a Payment Initiation Services Provider to requesr a payment on the account holder’s behalf, which their bank then presents to the customer (e.g. through their banking app) for authorisation.

I recommend that the OP read this website - https://www.openbanking.org.uk/what-is-open-bankin... - and speak with their bank if they’re not entirely comfortable.

Thank you for the link

[esuuv]

We had this when we rented a flat back in 2019 - I thought it looked iffy, and HSBC confirmed that we shouldn't do it.

We provided some PDF statements and payslips, all was fine.

in theory and according to the open banking website it can work, but estate / letting agents aren't the most trustworthy sector - who knows what could end up happening.

[paulrockliffe]

Open Banking is an API with a complex security layer on top. You authorise the level of access someone has to your account. The request I assume is being run through a third party app, so they would not be asking for permission to initiate payments or anything else. There is a specific element of the API that is intended for allowing quick and easy credit checks, it's intended to allow businesses to manage the risk in extending lines of credit to their customers.

I would have a look at that part of the API and see what it actually returns. It may not return any transaction data at all, just a score, but I haven't accessed that part of the API to see what is available there.

[bunchofkeys]

Thanks for the input.
Unfortunately EA Hamptons won't accept the 12 months up front, just asked, and they won't accept the paper reference. It's all through this open banking or nothing, and I would have wasted the holding deposit.

[NDA]

bunchofkeys said:

Thanks for the input.
Unfortunately EA Hamptons won't accept the 12 months up front, just asked, and they won't accept the paper reference. It's all through this open banking or nothing, and I would have wasted the holding deposit.

That's interesting.

I find it hard to see why Hamptons would refuse the full payment on what I assume is a 12 month contract. Paying the full 12 months would negate any need (and the purpose) for financial references.

I wouldn't want any third parties (particularly those associated with a rental guarantee) having access to my accounts. I guess I'd try to open a new account just for this purpose.

[Zolvaro]

bunchofkeys said:

Thanks for the input.
Unfortunately EA Hamptons won't accept the 12 months up front, just asked, and they won't accept the paper reference. It's all through this open banking or nothing, and I would have wasted the holding deposit.

What did the terms and conditions state when you paid the holding deposit? if it doesn't mention Open banking or similar then I would give them the choice of using another acceptable method of checking your accounts or refunding your money.

[TownIdiot]

NDA said:

That's interesting.

I find it hard to see why Hamptons would refuse the full payment on what I assume is a 12 month contract. Paying the full 12 months would negate any need (and the purpose) for financial references.

I wouldn't want any third parties (particularly those associated with a rental guarantee) having access to my accounts. I guess I'd try to open a new account just for this purpose.

Same with us a couple of years ago
Think that was foxtons

[LooneyTunes]

NDA said:

bunchofkeys said:

Thanks for the input.
Unfortunately EA Hamptons won't accept the 12 months up front, just asked, and they won't accept the paper reference. It's all through this open banking or nothing, and I would have wasted the holding deposit.

That's interesting.

I find it hard to see why Hamptons would refuse the full payment on what I assume is a 12 month contract. Paying the full 12 months would negate any need (and the purpose) for financial references.

I wouldn't want any third parties (particularly those associated with a rental guarantee) having access to my accounts. I guess I'd try to open a new account just for this purpose.

Paying 12 mths up front wouldn't negate the need for financial references - you want to be sure that the tenant can afford the rent when you enter any rolling period and can also afford it in the context of bills etc. Getting 12 mth up front doesn't give you that insight.

Personally I think OB is too intrusive (and you'd want to ensure that it wasn't a condition that you had to provide it on an ongoing basis). Your bank should be able to provide a certified copy of recent statement which should more than suffice.

[NDA]

LooneyTunes said:

Paying 12 mths up front wouldn't negate the need for financial references .

It did in my son's case. Immediately in fact.

[LooneyTunes]

NDA said:

LooneyTunes said:

Paying 12 mths up front wouldn't negate the need for financial references .

It did in my son's case. Immediately in fact.

It wouldn’t with all landlords.