Guarantor agreement still valid after rent increase?

by Readers Question

8:59 AM, 9th July 2020
About a month ago

Guarantor agreement still valid after rent increase?

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Guarantor agreement still valid after rent increase?

Hello, I am interested in increasing the rent of a long term tenant that is paying well below market rate.

The new monthly rental rate would be more than 10% than the rent level which the guarantor signed for on the original contract.

Would the guarantor still be “liable” after a significant increase in rent for the full amount, the original amount or not liable at all?

Would I now need the tenant to sign another AST?

Many thanks

Alex



Comments

Graham Bowcock

9:31 AM, 9th July 2020
About a month ago

Alex

It really depends on what the guarantor signed up to, so check the wording of the agreement. You can't assume that the guarantee covers any rent increase so you may need to take a new guarantee - if the guarantor is willing to sign it. They may be liable for the existing rent, but as I say it very much depends on the wording of the agreement.

Gunga Din

11:26 AM, 9th July 2020
About a month ago

In a similar vein, is it true that rollover of a fixed term to a periodic can void the guarantor agreement because it effectively creates a new tenancy?

Chris @ Possession Friend

23:51 PM, 9th July 2020
About a month ago

Its possible for a suitably-phrased Guarantor agreement to cover a tenancy until its end, or if the Guarantor wishes to withdraw, sufficient notice for the Tenant to be evicted or vacate is required before Guarantor's liabilities can end.
( Not all Guarantor agreements cover the same thing )

Art Dobson

0:21 AM, 10th July 2020
About a month ago

I feel either way you'll want to inform the guarantor directly of the increase in writing. I think if you can trust the tenants perhaps offer them a new agreement with say a 5% increase but longer terms, a lot of tenants like to know they can be trusted for the long haul.
Ultimately be weary of pushing too high without some blowback on extra repairs and maintenance, with the quality of most btl refurbishments these days a lot can be in need of after 3 years, at 10% most wiley tenants will ask. 😏

Puzzler

8:27 AM, 11th July 2020
About a month ago

What does it say in the tenancy about rent increases? most say in line with inflation which 10% would not be.

Chris @ Possession Friend

19:13 PM, 11th July 2020
About a month ago

Reply to the comment left by Puzzler at 11/07/2020 - 08:27
Most Tenancy agreements specifically DON'T mention an amount or percentage.
Providing a tenancy agreement states that the landlord can increase the rent no more often that at 12 month intervals, - the amount the landlord sets Can't be challenged. ( i.e. Form 4 rent Increase is Not to be used ( see guidance note 9 on that form )
The reason for this is the case of Contour Homes Ltd v Rowen 2007.

Effectively, providing the Tenancy agreement mentions the landlord can decide to increase the rent, the First Tier tribunal have NO jurisdiction to hear or set the rent. i.e. either the tenant counters with their One months notice to end tenancy, or if they stay, the [ increased ] rent becomes due.


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