Looking for off-campus housing when relocating for higher education, a new job or simply shifting permanently for good?
You’ll probably need a rent guarantor if you are looking to rent a property. Sometimes it is mandatory to have a guarantor to rent housing or accommodation. It depends on the landlord’s preferences and if you as an individual have enough money in the bank to “auto guarantee” your rent payment.
Usually, went you rent an apartment and you need a guarantor you’ll reach out to your parents or other close relatives who can guarantee the monthly rent will be paid no matter what happens to your finances.
Indeed, the landlord or agent will ask your rent guarantor to make the payment on your behalf if you fail to comply with your monthly payments.
What does being a guarantor for rent mean?
A Guarantor is a person, business, or another entity undertaking to “guarantee” someone else’s contract or tenancy agreement for both furnished or unfurnished accommodations.
The rent guarantor essentially assumes all of the responsibilities that the primary subscriber (aka the tenant) to the tenancy agreement is assuming. To put it another way, if a tenant signs a tenancy agreement, the rent guarantor is in charge of carrying out all the payments that he/she fails to perform.
Depending on the leasing agreement, it may also imply that the rent guarantor is responsible for any additional expenses, including damages and sometimes even the rent owed by additional tenants who are living on the property.
Therefore, your rent guarantor can be asked to pay what you owe to the landlord if, for instance, you (or any of your co-tenants) cause damages to the property or fail to comply with monthly rent payments.
To put it in other words, someone who signs your lease with you and basically acts as your safety net is known as a rent guarantor. They could be a person, a group of people, or a business.
Their duty and obligations may vary significantly depending on the nation you are renting a property in, but their main duty is to be accountable for paying rent if the tenant they are guaranteeing for is unable to. Don’t be suspicious if someone uses the word co-signer instead of rent guarantor, the two terms are frequently used as synonyms.
Thus, a rent guarantor is a person who co-signs a lease for an apartment with a renter and promises to pay the rent if the tenant is unable to do so. Typically, the rent guarantor is a parent, relative, or close friend who is prepared to assume legal responsibility on behalf of the tenant renting the flat.
Guarantor and co-signer can be used interchangeably when discussing apartment rentals. If the tenants fail to pay the rent, both guarantors and co-signers are held accountable.
A rent guarantor often referred to as a lease guarantor, is a person who co-signs a tenant’s lease to help them meet the requirements for the rental. For instance, a landlord might demand a rent guarantor from tenants who have no prior rental history or don’t have a stable source of income.
There are numerous more situations to understand where a potential tenant may want a rent guarantor to sign the lease and why a rent guarantor becomes mandatory.
Is a rent guarantor mandatory?
Rent Guarantors are typically needed when the landlord has little information on a potential tenant.
In the United Kingdom, it is customary for a landlord to perform a thorough background check on a tenant before renting to them. A thorough financial check and references from past landlords are part of these checks.
This is not feasible for most students and recent graduates. Usually, it is their first time living away from home and they do not have either a credit history or a stable income. A landlord would ordinarily use this background data to determine who may be a trustworthy tenant. Instead, in these situations, landlords ask the tenant to appoint a rent guarantor so that they can defend their position.
This gives the landlord additional peace of mind, or a “guarantee,” that the conditions of their rental agreement are going to be met, especially the monthly payment of the rent.
However, there are many private landlords that accept DSS without the need for a guarantor.
Is a guarantor always needed when it comes to student rent?
Simply put, they are not. Most university-owned housing won’t need a rent guarantor.
Additionally, most student housing won’t require a rent guarantor if you pay all or a sizable amount of your rent in advance. This is because you remove a significant portion of the landlord’s financial risk. For international students, who frequently don’t have access to UK-based guarantors, this is a common requirement.
Additionally, some accommodations providers are a little more adaptable than others. While other businesses, do demand a rent guarantor, their standards are less strict. For instance, they won’t insist that the guarantor has to be UK-based, as also mentioned in the how-to rent guide when talking about rent arrears.
Do All Tenants Need A Guarantor?
No, a guarantor is not mandatory by law.
But, a rent guarantor becomes necessary if one or more of the following situations happens:
1. Initial Renter
When determining if a tenant would make a good tenant, landlords frequently request references from them or inquire about their prior tenancy history. You are needed to have a co-signer in place of references if this is your first time renting a home
2. Low Earnings
You need to present income documentation in order to be approved as a renter for the apartment you’ve selected. As a general guideline, you are frequently needed to provide proof of income that is equivalent to or more than three times the cost of one month’s rent. The criteria vary based on the property and the landlord
3. Unreliable Income
Additionally, candidates without a stable source of income frequently need a cosigner so the landlord can make sure rent payments are always made on time.
If you have a history of lengthy periods of unemployment or months without pay yet an excellent credit score, it may raise some questions
4. Non-UK residents
In order to meet the criteria of renting residential property whether short-term rent or long-term, international students are frequently asked to include a guarantor on their leases
Can Anyone Be A Guarantor for Renting?
Being a rent guarantor is a significant commitment so it is rare you can be a guarantor twice. Keep in mind that you are essentially taking on responsibility for the property’s rent as well as any other obligations you are obliged to fulfil, like paying for damages etc. Many guarantor agreements are open-ended and substantially in the landlord’s favour, for instance, if a tenancy becomes periodic (after the fixed tenancy period has ended).
International students face a challenge when looking for an appropriate rent guarantor in a foreign country. If they weren’t nearby the city guide to learn how to select a suitable rent guarantor for themselves, this might have left them in despair. To begin with, a Guarantor can be anyone you feel comfortable discussing your visit with. They could be an organization, a living inhabitant, or a family member. Keeping the following in mind when choosing a rent guarantor:
- They must be ready to accept the responsibility on your behalf. A Guarantor’s responsibility is to effectively assume the obligations that the tenancy agreement’s principal party is making.
- Anyone who satisfies the requirements set forth by the landlord or agent may serve as a rent guarantor. They may also be an independent company.
- Your rent guarantor must be a UK resident if you’re moving there
Typically, the landlord (or their agent or the tenant referencing business they use) demands that a rent guarantor has the following specs:
- Resides in the UK
- Has reached the age of 18
- Has a home
- Has a reliable source of income that allows them to cover whatever debts the tenant owes the landlord
This is because they need a rent guarantor who can cover the debt if you are unable to do so for any reason. You cannot serve as your own guarantor, and you shouldn’t list anyone else as a rent guarantor on any form you sign without first getting their permission. For further details, click here.
Who Qualifies As A Rent Guarantor?
Becoming a co-signer on a lease is an easy process. Property owners request a small number of documents, such as:
- Name and birthdate
- Phone and email address
- Identification number
- Evidence of address
- Evidence of income (tax returns)
- New and old bank statements
A rent guarantor needs to make 80 times the monthly rent per year and have strong or exceptional credit. If your monthly rent is £2,000, your rent guarantor needs to provide proof of an annual income of at least £72,000. They must demonstrate that they can pay for your rent while still managing their finances, which is why the 36x threshold.
Do Guarantors Get Credit Checked?
A very common question to be asked is if my guarantor does not earn enough, will his credit be checked?
Your credit is verified, and you and your rent guarantor both need to present proof of your income. In this way, the rent guarantor is like he/she is simultaneously applying for the same flat. The rent guarantor’s credit must be good or exceptional, but it is usually necessary that they have credit in the excellent category, which is anyone with a score of 750 or higher. Keep in mind that each landlord or management firm has different requirements.
A risk-averse landlord may feel more at rest if they know the credit score of the rent guarantor is sufficient to cover the tenant’s payments. The majority of people with good to exceptional credit won’t risk damaging their credit by simply failing to pay their bills. This is why it is less stressful for you if your rent guarantor is aware of this information about you.
How long does a rent guarantor last?
Depending on the agreement, for as long as the tenancy lasts and for any rent increases, they might still be liable. The rent guarantor is also held legally liable for six years after the end date of the tenancy when it comes to damages to the property. Therefore, a landlord has six years from the date the rent became due to take action against you and your rent guarantor if you don’t pay your rent, be it weekly rent to monthly.
A rent guarantor continues to be legally accountable even if they become ill or lose their work unless the guarantee clauses specify otherwise. The answer to the question, ‘Can you be a guarantor twice?’ is yes, you can, as many times as you wish.
Is a guarantor only liable for unpaid rent?
Yes. As a result, the post carries a great deal of responsibility and should not be assumed carelessly or without being completely aware of what is being committed. There are numerous instances where guarantors are shocked and anxious to learn that they are expected to cover their relative’s rent.
Always verify the terms of the rent guarantor agreement, as you would with any other binding contract. The rent guarantor may also be held accountable for additional terms of the tenancy in a guarantee agreement, such as:
- Outstanding debts & council tax
- Property damage
- Unpaid rent from other joint tenants if the property is shared
- The landlord incurred legal fees as a result of the tenant’s behaviour
Does the rent guarantor have to live in the UK?
Since it is simpler for them to file a lawsuit against a UK resident, landlords typically prefer a rent guarantor who resides in the country.
If you’re coming from outside, such as if you’re an international student, this can be a problem for you. You can be requested to pay extra rent upfront if you can’t find a rent guarantor who resides in the UK.
Tenants in Shared Housing Who Guarantee Their Rent
It’s typical for the guarantee to apply to the entire rent, not just your portion if you share housing with numerous tenants under one lease agreement or a joint tenancy.
It’s advisable to carefully review the guarantee agreement and clarify any points with the landlord or the agent if necessary. The rent guarantor shall be bound by the terms and provisions of the agreement upon its execution and once agreed, a tenant cannot sue a landlord for any payments they are made to pay as part of this agreement.
You might be able to work out a modification to a guarantee agreement with the landlord. By doing this, you would guarantee that the rent guarantor’s obligation would be limited to your rent payments or any damage you might have caused.
Options if your tenant can’t get a rent guarantor
Finding a guarantor can be a hassle sometimes. If you can pass a credit check or provide income documentation, you might not require a rent guarantor at all. If you can pay a portion of the rent upfront, a landlord may still rent to you even if you have a bad credit history or a low income.
Rent deposit, bond, and guarantee programs are offered by several councils and organizations that:
- Give a deposit and cash to help with the rent
- Serve as a rent guarantor and pay for unpaid rent or damage up to a predetermined amount
For further details on these matters, click here.
The Guarantee Agreement
It is usually advisable to carefully review any guarantee agreement so that the rent guarantor is aware of how and when their duty expires. It could be possible to bargain for a modification to the guarantee agreement that would restrict the rent guarantor’s obligation. By stating the beginning and ending dates of the agreement, as well as the duration of the initial fixed time solely, for instance.
Unjust Guarantees in A Contract
If a clause results in a “substantial imbalance” between the contract’s parties, it may be considered unjust. If a word is deemed unfair, it cannot be relied upon and has no legal significance.
The rent guarantor may request that the court determine whether an unjust term in a guarantee agreement is permissible if the landlord seeks to enforce it. The court decides whether or not the rent guarantor is still obligated to pay if it finds the term to be unjust.
A rent guarantor is a person who consents to cover your rent and any damages. If a landlord fears that a tenant might not pay rent throughout the tenancy, they ask the renter to provide a guarantee. A rent guarantor can intervene in certain situations and carry out these commitments on your behalf.
Your rent guarantor must sign a guarantor agreement, which is a binding contract describing the duties of a rent guarantor. It contains information like:
- When it is possible to demand money from the guarantor
- The duration of the agreement and the duration of the guarantor’s liability
- What obligations does a guarantor have in a shared tenancy
Check here for additional questions to ask when renting a property and read out article on rent to rent for more information on using guarantor there.