What is a guarantor for rent?
A rental guarantor is someone who contractually agrees to cover a contract-holder's rent payments if the contract-holder becomes unable to pay themselves. The guarantor acts as a safety net, giving landlords assurance that they won't be left out of pocket.
Guarantors are typically close friends or family members of the contract-holder . However, they can be anyone the landlord deems financially stable and trustworthy enough to uphold the guarantee.
When Might You Need a Guarantor?
While not always mandatory, landlords frequently require contract-holders to provide a guarantor in certain high-risk situations, such as:
- Being a student or having a low/uncertain income
- Having a poor credit history
- Recently arriving in the UK from overseas
- Any circumstance where the contract-holder's ability to consistently pay rent could be compromised
From the landlord's perspective, a guarantor mitigates their financial risk when renting to contract-holders without a stable income or credit record. For contract-holders, having a guarantor can be the make-or-break factor in securing the rental property they want, and avoiding any risk of eviction through rent arrears.
Who Can Act as a Guarantor?
Potential guarantors need to meet strict financial criteria set by the landlord or letting agent. Generally, they will look for people who have an excellent credit score, own property in the UK, whose regular income is considerably above the rental amount, and have access to substantial savings.
Retired individuals or those living abroad are unlikely to be accepted as guarantors for rent.
Before approving a guarantor, landlords or letting agents conduct thorough credit checks and income/asset verifications to ensure they can realistically uphold the guarantee if needed.
What the Guarantee Covers
A rental guarantor agreement legally binds the guarantor to cover the following financial commitments if the contract-holder is unable to do so:
- Rent arrears
- Any costs arising from property damage
- Other financial obligations under the contract
The guarantor agreement clearly states which contract-holders it applies to and its length. The duration of the guarantor agreement typically matches the fixed contract term. However, some agreements may extend beyond the initial occupation period.
Guarantor Rights and Responsibilities
Guarantors should fully understand their rights and responsibilities before signing an agreement. This includes:
- Receiving copies of the guarantor and occupational contracts in advance
- Not being misled or unduly pressured into the agreement
- Only having responsibility to cover the original agreed rent amount (unless the guarantor consents to an increase in rent)
Contract-holders should also familiarise themselves with their rights, which our lettings team is happy to explain in more detail.
When Landlords Can Claim Against a Guarantor
If contract-holders named in the agreement fall into arrears or cause property damage, the landlord can legally pursue the guarantor for compensation.
This may involve formally requesting payment from the guarantor. If the guarantor refuses or cannot pay, the landlord can apply for a County Court Judgment (CCJ) against both parties to recover losses.
Local Expertise at Darlows
It is important for landlords to understand how rental guarantor agreements work, in order for occupations to proceed as smoothly as possible. At Darlows, we have a wealth of experience in letting and our team can provide expert guidance on all aspects of renting across the South Wales and Cardiff area.
Whether you're a contract-holder seeking to rent your next property or a landlord looking to minimise risk, get in touch with your local Darlows branch today. We'll ensure you have a suitable guarantor arrangement that protects all parties.
