There are a number of reasons why a tenant may need a rent guarantor and the request for one can be made either by the landlord or the letting agent handling the rental. If you have been asked to find yourself a rent guarantor, or asked to be one, but aren’t entirely sure about what they are and what they do, you’re in the right spot.
This post will tell you all you need to know.
Before we get into the finer details of rent guarantors and what’s expected of them, let’s first answer the most basic question of all...What is a rent guarantor?
What is a rent guarantor?
As one might expect, a rent guarantor is exactly that: someone who is willing to guarantee the rent will be paid should the tenant fail to do so. Rent guarantors do not, however, have to be individuals (although they commonly are...Hello, parents 👋🏻), as rent can also be guaranteed by a company, charity, or institution.
Having a rent guarantor in place effectively gives landlords a safety net should the worst happen and the tenant stops paying rent. Being a rent guarantor is a legally binding
contract, so those taking on the responsibility need to have full faith in the person they are backing.
When might a tenant need a guarantor to rent?
As we touched upon in our intro, there are a few reasons why a tenant may be asked to find a rent guarantor. Here are the most common:
- If you’re renting for the first time or have no references from previous landlords
- If you’re new to the UK
- If you’re unemployed
- If you have low income
- If you’re a student
- If you have a bad credit rating (or no credit history at all)
What is the guarantor for rent liable for?
Naturally, the rent guarantor will be liable for unpaid rent, but some tenancy agreements may go beyond that. Depending on what’s stipulated in their contract, some landlords may require the guarantor to be the tenant’s financial support system for other conditions, including any damage made to the property in question.
As each tenancy agreement will vary, the only way to be 100% certain of your liability as a guarantor is to check the contract before signing anything. This is especially pertinent when the tenant you’re backing will be sharing with others, as the agreement may even include a ‘Joint and Several Liability’ clause.
A Joint and Several Liability clause basically means that everyone listed on the contract is liable to cover all costs, regardless of who reneges on their responsibilities. In short, this means that if a flatmate were to stop paying rent, the other tenant would be liable to pay their arrears. This includes everything listed in the tenancy agreement, not just rent.
Therefore, the only answer to the question, ‘What is the rent guarantor liable for?’, is ‘It depends’. One thing is certain, though...the guarantor must read and understand the tenancy agreement before they sign.
Who can be a guarantor for rent?
As we mentioned in the ‘What is a rent guarantor?’ section above, either an individual or a company, charity, or institution can be a guarantor for rent. In fact, there are no legal requirements as to who can or cannot perform the role; it’s more down to the discretion of the landlord or letting agent and who they deem eligible based on their own criteria.
There are, however, a few points that almost all landlords will agree on:
- Guarantor must be UK based - This isn’t a legal requirement, but almost all landlords will want someone who is based in the UK to be named the guarantor. This is largely for convenience, as financial records will be easier to check, but also because it will be easier for the landlord to take legal action should they need to do so.
- Must be able to demonstrate financial stability - An obvious, and universal, requirement is that the guarantor has enough financial clout to cover any eventuality. This will often take the form of the guarantor needing to be a UK homeowner, but can be demonstrated in other ways, providing they satisfy the landlord in question.
- The guarantor is willing to be subjected to background checks - It’s all well and good a guarantor saying they can cover all costs, but it’s unlikely you’ll find a landlord willing to take their word for it. Checks will be run, and in the next section we’ll look at what those are likely to be.
What checks can a rent guarantor expect?
Briefly speaking, a rent guarantor can expect to have the same checks run on them that any tenant would.
While the specific checks may vary from landlord to landlord, rent guarantors can expect to have their credit history looked at, as well as their employment records and whether or not they have any CCJs against their name or have recently been declared bankrupt.
For homeowners, a Land Registry Ownership of Property check may also be carried out.
Can my landlord contact my rent guarantor?
Yes, but only if you fall into arrears. Your landlord certainly shouldn’t get in touch with your guarantor for other issues, such as noise nuisance for example, which will undoubtedly come as a relief to those who have their parents listed as guarantors!
What happens if the guarantor falls ill or loses their job?
We all know that life throws up surprises, and rent guarantors aren’t exempt from that. So, what happens when the worst happens? Unfortunately, for the rent guarantor, the liability remains. They would still need to cover the costs they promised they would when signing up as a guarantor.
Even extremes like bankruptcy and death may not get them off the hook. Those who file for bankruptcy may find that the landlord is named as a creditor, while the debt may be claimed from the guarantor’s estate should they pass away.
In a nutshell, agreeing to be a guarantor for rent is no joke and should be taken very seriously indeed.
Regardless of which side of the rental fence you may sit, either as a tenant or a landlord, Petty Son and Prestwich can help. We have been operating in and around Wanstead, East London ever since 1908, so we know a thing or two about the local property market.
Trust is as important for tenants as it is for landlords, and our century-plus existence allows you to rent or let through us with confidence. We’re also fully accredited, too, covered as we are by all of the industry’s main governing bodies, including:
- The Association of Residential Lettings Agents
- The National Approved Lettings Scheme
- Tenancy Deposit Protection Scheme
- The Property Ombudsman
- The National Association of Estate Agents
Our boutique approach to agency life also allows us to deal with you in the manner you deserve...you are never a mere number here at Airsat Real Estate. Communication is key to our continued success, and our professional lettings team will be there with you every step of the way.