There are few guarantors in life
By Geoff Davies, Specialist Housing Advisor, Citizens Advice Staffordshire North and Stoke on Trent
Increasingly, landlords in the private sector are asking prospective tenants to provide a guarantor before agreeing to let a property to them.
A “Guarantor” is the person that chooses to accept the liability on behalf the tenant in the event of the tenant being unable to meet their obligations under the tenancy agreement, whether it is for rent arrears or damage to the property.
The guarantor will normally be asked to sign a guarantor agreement. This provides the landlord with increased security at no extra cost.
For some prospective tenants it can be difficult to find a guarantor. They may have no family, be estranged from family or have family and friends who are unwilling or lack the means to act as a guarantor.
A guarantor is all about providing the landlord with a sense of financial security should things go wrong. So if a tenant can provide the landlord with a substitute form of security then the landlord may be willing to compromise.
This article looks at what other options a prospective tenant may have if they cannot provide a guarantor.
Good rental History
If a prospective tenant has a rental history of a number of years without issues then this should be highlighted to the landlord. If good references can be provided from former landlords this might be enough to convince a landlord that a guarantor is not needed.
Paying rent in advance
While not an option for many tenants, if a tenant has the spare cash, then paying a lump sum in advance can provide a landlord with the security they crave.
Rent Guarantee & Legal Expenses Insurance
The tenant could agree to pay the premium for a rent guarantee insurance policy for the landlord. It’s an insurance policy that covers rent if the tenant falls into arrears, but most policies also cover legal expenses if the landlord has to take court action to evict the tenant. The costs is about £150.00 a year.
Increase the security deposit
Instead of the usual deposit of one months’ rent the payment of a larger deposit may give extra security to the landlord. This greatly increases the upfront costs but the cost should be recoverable at the end of the tenancy when the deposit is refunded.
Use a Rent Guarantor Service
These are companies who will agree to act as your guarantor for a fee. They may however, be entitled to ask you for payment from you if they have to pay out money to the landlord. These private schemes typically ask for a co-signer. A co-signer is someone who signs the same agreement as the tenant. As a result, they will be liable to repay any money the company has to pay on the tenant’s behalf to the landlord. The difference between a guarantor and a co-signer is that a co-signer will not normally need to be credit checked.
These companies may not agree to guarantee high risk cases but will usually guarantee people with a poor credit rating, or in receipt of benefits for an annual payment. Prices seem to range from between £250 and £350 per annum.
Find a private landlord who does not require a guarantor
Look for adverts on sites such as gum tree or the local newspaper where often landlords will deal directly with a prospective tenant and do not require a guarantor.