A guarantor is a third party who 'guarantees' an agreement. This means they agree to repay the total amount owed if the renter can't pay what they owe. By guaranteeing the agreement, you become responsible for any for any arrears that may occur.
What is a guarantor?
A guarantor co-signs your tenancy agreement and is legally required to fulfil your contractual obligations should you, the tenant, default or neglect to do so. For example, guarantors can be responsible for rent arrears, damage, utility costs, and so on. Guarantors are needed in select cases where the renter is unable to meet affordability requirements during referencing.
A guarantor gives extra insurance or security to the landlord. Therefore, getting a guarantor is one of the ways to secure a tenancy despite not meeting affordability requirements. The guarantor will then have to provide personal information in order to go through referencing. The guarantor will be asked to sign a guarantor agreement that confirms their responsibilities.
Who can be a guarantor?
Anybody who meets referencing requirements (good credit history, income that proves affordability, valid ID) can be a guarantor.
When is a guarantor needed?
Renters who are unable to pass the referencing process will need a guarantor. A renter may be unable to pass the referencing process due to a number of reasons:
- No credit or bad credit
- First time renting
- No references
- No steady source of income
- Not enough income or savings
- Not a UK resident
Does the guarantor have to live in the UK?
Yes, it is required for the guarantor to have residency in the UK. This is needed as if for any reason the tenant doesn't pay rent and the landlord has to go to court it will be easier for them to take legal action against a UK resident.
When does the guarantor’s liability end?
Again, this depends on what the guarantee agreement says. Many agreements don’t have a fixed end date, and instead will require the guarantor to be responsible for liability “under this tenancy/agreement.” Because that is so open-ended, guarantors would still be liable if the tenancy is extended or if there are changes made to the tenancy such as an increase in rent.
In those cases, a guarantor can only leave the agreement if both parties mutually agree to end it, the tenant moves out, or with a possession order from the court.
What if I can’t find a guarantor?
A number of companies and organizations run guarantor schemes renters can take advantage of. For example, if you are a student your university may have a guarantor scheme. Many private companies run guarantor schemes as well.