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The cost of renting in the UK is increasing – rents across the UK rose 2% in March 2018 and renters now pay an average of £919 a month. For those based in London, the average rent is £1,560. As rents rise far in excess of wage growth, it becomes increasingly difficult for tenants to cover their monthly housing costs. The risk that this creates for landlords is something that many have been attempting to provide for by asking for rental guarantors. If you’re asked to be a guarantor for someone else’s rent then what exactly is involved and how should you handle it?
Landlords tend to ask for a guarantee where there is any risk that the tenant may not be able to make the rental payments on a property. So, for example, landlords renting to students often ask for guarantees because students don’t have an income. Anyone who doesn’t pass a credit check may also be asked to provide a guarantor, as well as those who are under 21 and tenants who have worked for their current employer for less than six months. Anyone on a low income who can’t show any savings to cover future rental payments may not be able to rent without a rental guarantor. The use of guarantors is now widespread for things like loans, and utility payments, but this is fundamentally nothing new.
Effectively, the guarantor will step in and make the rent payments if the tenant is not able to do it themselves. If the guarantor doesn’t make the payments then the landlord will be able to take legal action against the guarantor. The guarantor will be liable for any rent that goes unpaid but may also find that the landlord asks them to cover other costs, such as the expense of repairing any damage that the tenant has done to the property.
Guarantors must be over the age of 18 and landlords tend to insist that the guarantor lives in the UK. This is because it’s much more difficult to take legal action against a guarantor if they are based overseas. Most landlords also insist that the guarantor is a UK homeowner and some may require a guarantor to be able to show that they have enough income to cover any potential payments that must be made under the guarantee.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley