What does it mean?
When renting a private property or a room in a house the prospective tenant may be asked to provide a guarantor. This is someone who is legally responsible for the rent if the tenant doesn’t pay, or for any damage that occurs during the tenancy.
In this blog, we’ll look at why landlords for a guarantor and the things to consider if you are asked to be one.
WHAT IS A GUARANTOR AND WHAT ARE THEY RESPONSIBLE FOR?
A guarantor is usually a parent, relative or close friend who is happy to guarantee to the landlord that the tenancy agreement will be fulfilled.
They take on the financial responsibility for the rent and other obligations of the tenant i.e. to pay for any damage caused to the property. They act as a safety net and give the landlord the reassurance that they will receive the money owed even if the tenant is unable to.
WHEN MIGHT YOU NEED A GUARANTOR?
There are a few scenarios where a landlord will ask for a guarantor. It could be because:
- You are a student – you will have little or no income from regular employment and will probably be relying on student loans. Parents will most likely be a guarantor in this case.
- You are a young person – if you have little or no borrowing history or have only had a bank account for a short time you will not have a very good credit score.
- You’ve recently moved to the UK – to have a credit score you need to have lived in the country for a while holding a bank account for 3- 6 months
- Your income is low or you are unemployed – if you don’t earn very much or you receive Universal Credit a guarantor may be required in case you get into financial difficulty.
- You are renting for the first time – if you cannot provide a reference from a previous landlord, you may be asked for a guarantor. However, if your income is high, you may not require one.
WHAT’S THE PROCESS TO BECOME A GUARANTOR?
If a tenancy agreement requires a guarantor then a separate document called a guarantee application will need to be filled in and signed by the guarantor, the tenant and the landlord.
Sometimes the guarantee section may be a part of the tenancy agreement, but usually it is separate.
The guarantee document will make clear the relationship to the tenant, whether the guarantor is liable for just rent or any other costs, the dates of the tenancy and the amount of rent expected.
Additional checks will be required such as:
- Proof of UK citizenship
- A resident UK home owner
- Aged between 25-70 years
- In full time employment
- Additional affordability criteria
It’s important to note that the tenancy will not start until the guarantor has signed their guarantor application and been approved.
WHEN DO THE RESPONSIBILITIES OF THE GUARANTOR COME TO AN END?
The guarantor’s liability comes to an end when the tenancy ends. If the tenant’s contract doesn’t have a specific end date agreed it will be when:
- The tenant serves notice and the agreed end date.
- By mutual agreement by the landlord and the tenant to decide on an end date
- If there is a court repossession order
- The death of the tenant
DOES THE GUARANTOR NEED TO LIVE IN THE UK?
Yes, normally landlords and agents like a guarantor to live in the UK so that a credit check can be carried out, as each nation has their own checks and systems, and they cannot be transferred.
If you are an international student and can’t get a guarantor, you may be required to pay some or all of the rent in advance.
WHAT ARE THE RISKS FOR A GUARANTOR?
Acting as a guarantor for someone is a big responsibility. You’ll want to have a good personal relationship with the tenant and understand their financial situation pretty well to know how much of a risk you are taking. Generally, guarantors are parents or close family members of the tenant.
It is vitally important that a guarantor reads the contract thoroughly understanding whether the tenancy is individual tenancy – so they are only liable for that person’s rent, or a joint tenancy – where one guarantor could be responsible for other tenants in the house not paying their rent.
As a guarantor you’ll want to make sure your own finances are in a strong and stable position should the landlord or court ever be required to ask you for the monies owed.
Guarantors should speak to the letting agent or take independent legal advice if they are unsure about any part of the agreement they are signing
Source: Yourabode.co.uk