Renters’ Rights Act sparks guarantor surge

Demand for rent guarantors has surged by 50% since the Renters’ Rights Act came into effect in May, according to new data from Housing Hand.

The guarantor provider said applications have risen sharply over the past 100 days as landlords and letting agents adjust to new rules on rent paid upfront.

Under the Renters’ Rights Act, landlords and agents can no longer accept large amounts of rent in advance.

Once a tenancy agreement has been signed, they may require no more than the initial month’s rent before occupation, although a tenant can voluntarily choose to pay rent early once the tenancy has begun.

Growth in rent guarantor applications

Graham Hayward, managing director, Housing Hand, said: “The growth in rent guarantor applications we have received in the last 100 days has been phenomenal, as the market manages its changed risks in the new Renters’ Rights Act landscape.

“Most landlords (PBSA are largely RRA exempt) can’t request or take more than one month’s rent upfront anymore, so they’re asking renters to provide guarantors instead.”

However, the data also reveals Housing Hand hasn’t seen a significant increase in claims for missed rent. The business has paid out around £7m to accommodation providers over the past five years, averaging around £1.5m a year, a figure that remains unchanged.

He added: “The overall volume of payouts remains pretty static. The rental landscape has changed significantly, and driven up demand for rent guarantors enormously, but landlords who have worked proactively with guarantor services have largely taken the changes in their stride.”

Overseas tenants struggling to provide a guarantor

The news comes as overseas tenants are struggling to provide a UK-based guarantor despite being able to afford the rent.

According to data from Zero Deposit, London rents have increased by almost 10% (9.9%) in the two years since May 2024, rising from an average of £2,088 to £2,294.

Data from Foxtons reveals that almost two-thirds (63%) of its tenants come from overseas, meaning many international renters may struggle to provide a UK-based guarantor despite being able to afford the rent.