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How Do I Get a Guarantor?

Research has revealed that over the last four years the number of landlords requesting their tenants find a guarantor before moving into a rental property has skyrocketed by 36% With the average cost of renting at its highest point in thirteen years, landlords are seeking additional measures to secure their rental income in the wake of the pandemic. But, at a time when rent accounts for over a third of a tenant’s monthly income, we explain how to find a guarantor.  

How Do I Get a Guarantor?  PropertyLoop

What Is a Guarantor?   

A guarantor is an additional party to the tenancy agreement that is legally bound to cover any debt the tenant accrues over the course of the tenancy. This means that if the tenant misses an expected rent payment, or causes damage to the property that is not sufficiently covered by the security deposit, the guarantor must pay these amounts on their behalf.  

Why Would I Need a Guarantor?   

Landlords and letting agents will commonly request that the occupants of their rental property are able to source a guarantor if they have sufficient reasoning to believe the tenants may face some difficulty in maintaining their regular rental payments. This could be because a tenant failed to pass the affordability checks during the referencing process due to a low credit score or an insecure income as a result of inconsistent employment. In the overwhelming majority of instances, landlords that let rental accommodation to full-time students will also request their tenants find a guarantor. This is because they are unable to put their tenants through the traditional referencing process as they are likely to have minimal credit history and only part-time employment, with the guarantor giving the landlord some security around their rental income.  

Who Can Be a Guarantor for a Tenant?    

Typically speaking when needing to obtain a guarantor tenants will turn top close friends or family members. With this being said almost anyone can be a guarantor however landlords and letting agents will require the guarantor to have a sound credit history, unblemished by historical debt, and in some cases possess a level of savings over a certain threshold. Further to this, if the person nominated to be a guarantor is retired, lives abroad or doesn’t own their own property then they may face some difficulty assuming the role.  

Who Can Be a Guarantor for a Tenant?PropertyLoop

Do You Have to Be Employed to Be a Guarantor?    

As mentioned, the guarantor will have their credit history evaluated before they take on the duties officially. This is because the landlord will need to ensure that the guarantor has the financial means to cover any rent payments missed by the occupant. To this end, anyone that wishes to be a guarantor will likely need to pass a series of affordability checks, similar to those seen in the tenant referencing process.  

These assessments will not only see the guarantor’s credit history see scrutiny but also their employment status, with some lenders asking the applicant to provide sufficient proof of their earnings. 

What Happens if You Don’t Have a Guarantor?   

Fortunately for tenants, obtaining a guarantor is not the only way in which an occupant can help protect their landlord’s income and their future rental payments. Typically, those that are unable to find a guarantor are asked to pay rent in advance. Naturally, this will add to the already high upfront costs associated with renting, seeing the tenant not only provide their landlord and letting agent with a holding deposit and security deposit, but around six months’ rent before moving into the property. It is worth noting that unlike the deposits renters are expected to pay before moving in, there is no limit placed on the amount landlords can request, however, it is uncommon for aspiring remnants to pay more than six months rent in advance.  

Alternatively, zero deposit schemes are becoming increasingly popular amongst renters. Perhaps the greatest benefit to those in search of a new home is the hugely reduced upfront cost to renting, with there no longer being a need to provide the landlord with a deposit equal to the cost of around five weeks rent. Whilst this may initially appear as a significant loss for the owner of the rental property, they instead benefit from an insurance-like coverage of up to six weeks rent, higher than the protection typically granted through a traditional security deposit. Tenants will be required to pay a non-refundable fee to establish the cover and then be charged at the end of the tenancy for any damage or rent arrears.  

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