With current demand for rental properties at a high, landlords have the luxury of being able to cherry-pick the tenants they want. Not all tenants will be the cream of the crop in a landlord’s eyes, though, and tenants might need to provide further reassurance that they can meet the financial obligations of a tenancy agreement. This often comes in the form of a guarantor. In this article, we review the circumstances in which the help of a guarantor may be required and what this means to both the tenant and the guarantor.
What is a Guarantor?
In essence, a guarantor is someone who agrees to provide the landlord with an assurance in the form of a ‘guarantee agreement’ that they will pay the monthly rent for another person as part of their tenancy agreement or contract, should the tenant fail to do so. A company or organisation can also step into this role.
Who Can Be A Guarantor?
Anyone can be a guarantor provided they meet the criteria set out by the landlord or an agent acting on the landlord’s behalf. Generally speaking, typical criteria might include either:
- That a guarantor needs to live in the UK (this makes any potential legal claims against a guarantor much easier than if they live abroad); or
- That a guarantor must be able to meet any financial obligations set out in the tenancy agreement. A landlord is unlikely to want a guarantor who is not in a financial position to pay unpaid rent or for any other liabilities should the tenant default.
Additionally, a guarantor may need to provide proof of income or demonstrate a strong credit rating to satisfy the landlord’s requirements.
What Circumstances Might A Tenant Need a Guarantor?
Before taking on a tenant to rent a property, a landlord or person acting on their behalf will conduct an in-depth credit check and review finances, along with references, to see if the tenant is likely to be able to meet the terms of an agreement. Obviously, for a landlord, the ideal tenant is solvent with a very good credit rating, in long-term regular employment, or able to pay the entire annual rent in advance. However, finding someone who meets all these criteria is not always easy. There are, however, some specific indicators which might make a landlord concerned over a tenant’s ability to pay their rent:
- Holding no credit history or a poor credit history
- A tenant on a zero-hours contract with their employer
- Being unemployed or on a low income – likely not having enough money each month to cover the cost of rent
- A student not in regular employment
- Anyone returning from living abroad or leaving the Forces
In these cases a landlord or their agent might ask for a guarantor to mitigate risk.
If a tenant cannot provide a guarantor, they may be required to pay rent in advance to secure the tenancy. This can help reduce a landlord’s concerns about potential unpaid rent and make the tenant a more attractive prospect.
What If I Can’t Find a Guarantor?
Unfortunately, if you happen to fall within any of the above categories, a landlord is unlikely to take you as a tenant without a guarantor. Working to improve your circumstances, such as boosting your credit rating or saving enough to pay rent in advance, could improve your chances. Alternatively, living with friends or family until you are a more attractive tenant for a landlord might be your only option.
What it means to be a guarantor?
Think carefully and be fully aware of your obligations and responsibilities if you agree to act as a guarantor. The commitment you are making is a big one – to take full responsibility for the payment of monthly rent for the property, should the tenant default. Be prepared for the fact that you might also be liable for other financial responsibilities, such as payment for any damage that has been caused or possibly even, in the case of a joint tenancy, the rent for anyone else named on the agreement. This is a common occurrence when a group of students are taking on a joint tenancy, for example, where each tenant is jointly and severally liable for all the rent.
Note that if you, as a guarantor, do not pay for any liabilities arising from being a guarantor, then you could be pursued through the courts by the landlord under the terms of the guarantor agreement.
Why a Guarantor Can Help Secure a Property
Having a guarantor is one way of helping you secure a rental property where the landlord might not otherwise have considered you. It is important, however, that everyone understands the responsibility that comes with this. If you’re struggling to find a guarantor, consider exploring professional rent guarantor services, which can act as a solution for tenants without suitable personal options.
It’s important to think carefully and be fully aware of your obligations and responsibilities if you agree to act as a guarantor.
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