![\"Guarantor](\"https:\/\/www.rentila.co.uk\/assets\/img\/blog\/blog_secure.png\" "\\"newspaper\\"")
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Guarantors are another way landlords can protect themselves and increase their financial security. In many cases, they work perfectly fine. But they aren\u2019t always the best or most suitable option.<\/p>\n
Mandating a guarantor can drastically impact tenancies, and not getting the agreement, signing process, or referencing right can be even more problematic for landlords.<\/p>\n
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In this article, we\u2019ll explain when guarantor agreements are helpful, when they don\u2019t work, and what to include in a \u201cgood\u201d agreement.<\/p>\n
A guarantor is a named person who is legally obliged to pay the rent if the tenant cannot<\/strong>. They must generally be of working age, live in the UK, earn a stable income, own their own home, and have a good credit history.<\/p>\n The guarantor can be legally obliged to pay for:<\/p>\n Generally, landlords ask for a guarantor in certain circumstances, such as:<\/p>\n A guarantor is only useful if the agreement is clear, enforceable, and signed correctly<\/strong>. Landlords can be burned financially if the guarantor arrangement or the agreement doesn\u2019t cover all bases.<\/p>\n To avoid challenge (and guarantor agreements not being legally enforceable for the required payments), the tenancy agreement and related documents should clearly state:<\/p>\n Key elements to include in the guarantor agreement include:<\/p>\n Bear in mind that the more you ask for from a guarantor, the harder it may be for some tenants to get the guarantor\u2019s approval. A good rule is to ask for what\u2019s necessary when it\u2019s necessary<\/strong>.<\/p>\n Blanket policies that cover everything are good for delivering more financial security, but they can be off-putting for some tenants and their guarantors. Assess the level of risk and match your agreement accordingly.<\/p>\n For example, parents of students may be happy to cover rent arrears, but may not be willing to sign up to an agreement that lasts longer than the students\u2019 studies and includes potentially thousands in damages.<\/p>\n Not every guarantor agreement is legally enforceable \u2013 nor will it offer landlords the financial protection they need.<\/p>\n Common failures in guarantor agreements include:<\/p>\n Specificity is key in any legally enforceable document. Make it clear who, when, and what applies<\/strong> in the situation when a rent payment is missed.<\/p>\n For example, vague wording may be:<\/p>\n The guarantor agrees to pay any money the tenant owes the landlord.<\/em><\/p>\n But a clear, actionable, and legally enforceable agreement may say:<\/p>\n The guarantor must pay the landlord any outstanding rent arrears within 14 days of receiving a written demand, provided the landlord has first issued a formal 7-day payment reminder to the tenant.<\/em><\/p>\n Make sure the agreement is signed and have a clear process for how the signing process must work.<\/p>\n For example:<\/p>\n Agreements can fail if the witness wasn\u2019t clear on their role, or if they sign before the guarantor does.<\/p>\n When making “major” changes to the core terms of the tenancy agreement, landlords must obtain written consent from the guarantor. Otherwise, the agreement is automatically voided.<\/p>\n Some examples of changes that may require the guarantor to review and re-sign include:<\/p>\n Landlords have a duty to ensure their terms are deemed fair. Including \u201cunfair\u201d terms in a guarantor agreement can lead a court to rule that it\u2019s void or unenforceable.<\/p>\n Some clauses that can breach the Consumer Rights Act 2015 include:<\/p>\n To assess the suitability and legitimacy of the guarantor presented by the tenant, landlords should:<\/p>\n Guarantors offer coverage, but they’ll never cover you for all the financial risks of being a landlord. There are some instances where a guarantor isn\u2019t enough to protect yourself. For example:<\/p>\n Consider further protection you can create for yourself, such as getting landlord insurance<\/a>, continuously improving referencing checks, and utilising property management software<\/a> to create standard policy documents and rent payment reminders.<\/p>\n No, landlords don\u2019t need a qualifiable reason to request a guarantor<\/strong>. For example, there isn\u2019t a set of eligible circumstances when a landlord can request it. They can request a guarantor for any reason.<\/p>\n However, having a blanket policy of requiring a guarantor for all tenants isn\u2019t always a good strategy. Some tenants can be put off by the requirement or may not have a guarantor, especially if they have a good track record.<\/p>\n Not everyone should be a guarantor for a tenant. Guarantors should offer financial protection for landlords, so you shouldn\u2019t accept someone who:<\/p>\n Include in your policy\/communication with the tenant who you\u2019re willing to accept as a guarantor and what the specific requirements are.<\/p>\n Asking for a guarantor is a good way to protect yourself if a tenant doesn\u2019t pass all your financial checks. But in slower markets, these tenants may not be readily available.<\/p>\n There are options in these situations:<\/p>\n Guarantors are another way landlords can protect themselves and increase their financial security. In many cases, they work perfectly fine. But they aren\u2019t always the best or most suitable option. Mandating a guarantor can drastically impact tenancies, and not getting the agreement, signing process, or referencing right can be even more problematic for landlords.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,1],"tags":[159,169],"class_list":["post-8951","post","type-post","status-publish","format-standard","hentry","category-advise","category-rentila","tag-landlord","tag-rental-property"],"yoast_head":"\n\n
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The commercial reality: When is a guarantor beneficial?<\/h2>\n
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What to include in the guarantor agreement<\/h2>\n
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What are common failure points in guarantor agreements?<\/h2>\n
1. Vague wording<\/h3>\n
2. Unsigned or badly executed documents<\/h3>\n
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3. Material tenancy changes without updating the guarantee<\/h3>\n
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4. Trying to rely on unfair or overreaching terms<\/h3>\n
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Due diligence landlords should do on the guarantor<\/h2>\n
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When is a guarantor not enough to protect yourself?<\/h2>\n
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FAQs<\/h2>\n
Do landlords need a reason to request a guarantor?<\/h3>\n
Who cannot be a guarantor?<\/h3>\n
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What can be used instead of a guarantor?<\/h3>\n
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Things to remember: Guarantor agreements for landlords<\/h2>\n
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