Financially capable renters struggling to meet guarantor requirements

Overseas tenants are struggling to provide a UK-based guarantor despite being able to afford the rent, according to new data.

Findings by Zero Deposit reveal rents in London have soared to more than £2,000 a month, as landlords increasingly demand guarantors from prospective tenants.

The news comes as, under the Renters’ Rights Act, landlords and agents can no longer accept large amounts of rent in advance.

Growing demand for guarantors

According to the data, 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.

Over the same period, UK average rents have risen from £1,252 to £1,383. This 10.5% increase is greater than the capital’s, but London rents remain almost 50% (49.6%) higher than the national average.

With rent in advance banned under the Renters’ Rights Act, there is a growing demand for guarantors.

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.

Struggling to meet guarantor requirements

Sam Reynolds, CEO of Zero Deposit, said tenant competition remains intense, with many financially capable renters struggling to meet guarantor requirements.

He said: “London is unlike any other rental market in the UK. Rents are significantly higher than the national average, competition for homes is intense, and a large proportion of tenants are relocating from overseas.

“In that environment, it is increasingly common for renters to be financially capable of affording a property, but unable to provide a traditional UK-based guarantor. That can create unnecessary friction at the point of application, even when demand for housing is strong”.

Gareth Atkins, Foxtons managing director of lettings at Foxtons, added: “London remains one of the most competitive rental markets in the country, but the diversity of today’s tenant base means the ability to connect landlords with a broader pool of suitable tenants quickly and efficiently has become increasingly important.

“For landlords, lengthy void periods can have a significant impact on returns, particularly against a backdrop of rising costs and ongoing regulatory change. Every day a property sits empty represents lost income, which is why reducing friction in the lettings process has never been more important.

“At the same time, many prospective tenants who can comfortably afford their rent may not meet traditional referencing criteria. This is particularly common among international renters, students and the self-employed – groups that make up an important part of London’s rental market. The industry needs solutions that reflect the realities of today’s tenant base.”

The news comes as the government is urging landlords to review guarantor agreements that were put in place before the Renters’ Rights Act came into force.