Renting for six years, paying it on time every month, and still getting told by a mortgage lender that you can't prove you can afford a lower monthly payment than your rent — that's the exact contradiction the Financial Conduct Authority is trying to fix with its latest consultation. CP26/18, published this year and open for responses until 28 July 2026, sets out the most significant proposed shake-up of mortgage affordability rules since the tighter lending standards introduced after the 2008 crash.
Why the FCA is doing this now
The regulator already loosened one part of the system in March 2025, relaxing the interest rate stress tests that lenders use to check borrowers could cope with a rate rise. CP26/18 goes further and targets the groups the current rules leave stranded: first-time buyers with no mortgage track record, self-employed people with variable income, workers paid in foreign currency, older borrowers wanting to release equity, and anyone whose credit file carries a mark from years ago that no longer reflects their actual finances. FCA director David Geale put the rationale plainly: people are living longer and working differently than the rules assumed when they were written, and lending criteria need to catch up.
Four things the consultation actually proposes
Strip away the regulatory language and four concrete changes sit at the centre of CP26/18. First, lenders would be encouraged to treat a consistent record of rental payments as direct evidence of affordability — the exact scenario above, where someone paying £1,400 a month in rent gets assessed for a mortgage with a lower monthly cost, rather than judged purely on payslips that don't reflect their actual spending discipline. Second, self-employed applicants and those paid in foreign currency would face fewer automatic barriers, with lenders given more flexibility to build affordability products around irregular income rather than demanding the same three years of identical payslips a salaried employee provides. Third, older credit blemishes would carry less automatic weight, with lenders encouraged to assess a person's current financial situation rather than excluding them outright because of an impairment from years earlier. Fourth, and more technical: the interest-only mortgage rules would loosen for smaller interest-only elements, removing the requirement to show a credible repayment strategy where the interest-only portion sits below 25% of the property's valuation.
None of this removes the FCA's core requirement that lenders check a mortgage is actually affordable before approving it — the consultation is explicit on that point, and it should be, because the alternative is exactly the kind of lax underwriting that caused the 2008 crisis in the first place. What's changing is the evidence lenders can use to make that judgement, not whether the judgement has to be made at all.
What happens next, and on what timeline
The consultation window closed to new responses on 28 July 2026. From here, the FCA will review submissions from lenders, consumer groups and trade bodies before publishing a Policy Statement, expected in the second half of 2026. Broader policy work on the remaining themes — later-life lending in particular — is scheduled to run from the end of 2026 through into 2027. In practical terms, that means nothing changes for anyone applying for a mortgage this month. The rules in force today are the rules in force today, and lenders won't start factoring rental history into affordability assessments before the FCA formally confirms the new framework.
Should you wait for the new rules before applying?
If you're a first-time buyer with a strong rental payment history and you're currently getting rejected purely on payslip-based affordability checks, it's worth talking to a broker now rather than waiting a year for a policy statement that might not even land in your favour once lenders start implementing it — mortgage rule changes reliably take six to twelve months to filter through into actual lending criteria after a policy statement, and some lenders move faster than others. Brokers already have access to a handful of specialist lenders who factor in rental history informally, ahead of any FCA mandate, precisely because it's been an obvious gap in the market for years. Waiting for the regulator to formalise something that a subset of lenders already do quietly is, in most cases, the slower path to a mortgage offer.
Self-employed applicants sit in a slightly different position. The proposed changes for irregular income are genuinely more substantial than the rental-evidence tweak, and lenders are less likely to have informally adopted flexible income assessment ahead of a formal rule change — insurers and underwriters tend to move cautiously on income verification specifically because it's the area most exposed to fraud risk. If your income has been genuinely volatile for reasons you can document (a new contract structure, a client base that shifted, a business that's grown but doesn't show three clean years of identical figures), it's worth having that documentation ready for when the rules do land, rather than assuming a broker can talk a mainstream lender into flexibility that isn't formally sanctioned yet.
What to check before you apply, regardless of the reforms
- Request your rental payment history directly from your letting agent or landlord in writing — a bank statement showing the debit isn't always accepted as proof on its own, and some specialist lenders already want a formal reference.
- Pull your credit report from all three UK credit reference agencies (Experian, Equifax and TransUnion) before applying anywhere — lenders don't all use the same one, and discrepancies between them are a common, avoidable cause of rejection.
- If you're self-employed, have at least two years of accounts ready even where three used to be the standard ask; some lenders have already started accepting two years for strong applications, ahead of any formal FCA change.
- Ask a broker directly which lenders on their panel already factor in rental history or flexible self-employed income, rather than waiting for every lender to adopt it at once.
The FCA's own timeline puts formal rule changes at the earliest in late 2026, with full implementation likely stretching into 2027. For anyone house-hunting this year, the practical move isn't waiting for the regulator — it's finding the handful of lenders already doing informally what CP26/18 proposes to make standard.