What is a rent guarantor & who can be one?
What is a rent guarantor & who can be one?
Before a landlord agrees to lease their property, they want to make sure that the new tenant will pay their rent.
The most reliable way to do this is by running a credit check, which will highlight any black marks in the tenant’s financial history (for example late payments, debts and bankruptcies). And they could also request references from previous landlords.
However, this makes things tricky for students and young professionals. If you’ve never rented before, you won’t be able to get any references. And if you don’t have a credit card and haven’t taken out any loans, you’ll have little financial history...
...which is when guarantors come into play.
‘Guarantor’ meaning: a person or company that agrees to pay back a loan (or debt) if the person who borrowed it cannot.
In order to minimise the ‘risk’ of accepting you as a tenant, the landlord can require you to sign with a guarantor. This reassures the landlord that they’ll get the money they’re owed because if you don’t pay your rent they can call upon your guarantor to pay instead. If your guarantor doesn’t pay, the landlord can take them to court.
So, who can be a guarantor for renting? What does a guarantor need to provide? Does a guarantor have to be a homeowner? Read on for everything you need to know.
Who can be a guarantor?
It’s ultimately up to the landlord or managing agent to decide whether they’re happy to go ahead with your chosen guarantor. Usually, they will carry out a credit check and ask for either proof of your guarantor's income or savings.
The typical requirements:
- They DO need to be UK-based. This is because it’s then easier to view your guarantor’s financial records, and take legal action if necessary.
- They DO need to be able to meet the financial obligations of being a guarantor. So, they need to be able to show that they own their own property or earn enough money to cover the potential costs you might accrue.
- They DO NOT have to be a parent or family member, even though they are the most likely people to agree to being a guarantor for rent. Technically, it could be anyone who meets the above criteria.
What does a guarantor have to do?
Separate to the tenancy agreement, your guarantor will have to sign a ‘guarantor agreement’ which will confirm their responsibilities. Their main obligation will be to pay the rent if you cannot. They might also be liable for covering any other costs you incurred during the tenancy, such as damage to the property.
Things can get sticky if you and your housemates enter into a joint tenancy. Rather than signing individual contracts, a joint tenancy means that you’re all equally liable and responsible for paying the rent….and by extension your guarantor is too. So, if one of your housemates and their guarantor don’t pay, your guarantor will have to help foot the bill.
Unfortunately, joint tenancies are common with student lettings and there isn’t much you can do about it...apart from choosing your housemates wisely. For our top tips, read ‘The best ways to find a flatmate in 2021’.
How to get a guarantor for renting
First things first, ask your parents or a close relative. It’s a big commitment agreeing to be a guarantor so consider this carefully.
But, what if they don’t want to do it? Or they don’t meet the landlord’s criteria? You might be able to bypass the need for a guarantor by offering to pay a portion of the rent upfront. By doing this you’re removing a large element of ‘risk’ and reassuring the landlord that you’re financially stable.
Still not an option? We have something else you could try: from UK Guarantor to Housing Hand, there are a whole host of companies that have been set up to act as a guarantor to people who need it. However, you will have to pay a fee, typically around £300 a year.
Do you always need a guarantor to rent?
No, if you have been working and renting for a few years, most landlords or managing agents would be happy to verify you by running a credit check. And this is why it’s important to do what you can to boost your score; a good score indicates that you’re good with money, and therefore a good choice of tenant, a bad score, on the other hand, is likely to cause you some problems. Read ‘How to boost your credit score in 11 simple steps’ to give you the upper hand.
You’re most likely to be required to have a guarantor if you’re:
- A student or young professional renting for the first time
- Unemployed or have a low income
- Moving to the UK from overseas
How long are guarantors liable for?
It’s often quite open-ended. Guarantors for rent in the UK are typically liable for as long as the person they’re vouching for lives at the property. This means that if you decide to extend your contract, your guarantor will remain bound to the agreement.
Your guarantor should receive a copy of both the tenancy agreement and guarantor agreement before signing anything, so it’s important they check all the details. It might be possible to negotiate the guarantor’s liability length, limiting it to a set amount of time rather than an indefinite amount.
A few final tips...
Whilst we’re on the topic of tenancy agreements, how clued up are you about your rights and responsibilities? From the deposit to the inventory and notice periods, read ‘10 things you should know about student tenancy agreements’ now.
Once you have signed the agreement and have a move-in date, it’s time to sort out the wifi. We’ve rounded up the ‘Best student broadband deals 2021’ for high performance, buffer-free connections.