Rent prices set to soar as demand outstrips supply – RICS
3 years ago | 1 comments
Landlords increasingly seek guarantors for well-paid tenants
12:02 AM, 17th July 2023, 3 years ago
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Landlords and letting agents are increasingly asking for guarantors from renters who earn between £25,000 and £75,000, research reveals.
RentTech firm Goodlord analysed 220,000 tenancies between January 2020 and June this year and found that there has been a steady rise in requests for renters to provide a guarantor.
The firm says that 5.8% of tenants are now asked to provide a guarantor if they earn between £25,000 and £49,999.
In 2020, that figure was just 3.7% and Goodlord says the request rate is now higher than it was during the Covid lockdown.
‘Rental market is facing a series of overlapping challenges’
Goodlord’s director of insurance, Oli Sherlock, said: “The rental market is facing a series of overlapping challenges.
“We’ve spent years not building enough homes, meaning the supply of rental stock is low.
“This is being compounded by landlords – who are facing rising costs and ever more complex regulation – selling up and leaving the market.”
He added: “This supply and demand problem means rents are rising at a time when tenants have less disposable income thanks to the cost-of-living crisis.
“This means more tenants are being asked to show they have the support in place to meet their rental obligations, should they need it.”
Landlords who facing increasing pressures
It appears that landlords who are facing increasing pressures from rising interest rates pushing up mortgage costs are looking for rental payment reassurance.
The data shows there has also been a surprising rise in the number of tenants earning between £50,000 and £74,999 to provide a guarantor.
Despite earning much more than the national average, 2.59% were asked to provide guarantor this year – a 92% rise since 2020.
However, Goodlord says the rate of guarantor requests will fall this year as rents peak in the summer.
Tags:
average monthly rents, average rent in the uk, Cost of Living Crisis, goodlord, Guarantor Requirement Increase, Rent Guarantor Requirements, Rental Market Trends UK, Rising Rents in the UK, Tenant Earnings and Guarantors, UK Landlord Challenges
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Member Since February 2016 - Comments: 45
9:54 AM, 17th July 2023, About 3 years ago
I no longer accept any guarantor. If the prospective tenant cannot pass the affordability and credit checks to satisfy rent insurance, then that is entirely on them. As a bank or credit agency would state “these checks show the persons behaviours in the past”. I’m utterly fedup of prospective tenants that cannot afford a house, yet request a viewing (councils are behind some of them too as guarantors). I am fedup of rent to rent scams too. Do not let others take advantage of YOUR asset. Ensure you protect yourself no matter what.
Member Since May 2016 - Comments: 1575 - Articles: 16
10:02 AM, 17th July 2023, About 3 years ago
Our advice has been to only accept Tenants who pass referencing, AND have a suitable guarantor.
Lets be realistic, there’s no shortage of applicant Tenants in this market. ( as result of government measures )
Member Since June 2019 - Comments: 781
12:42 PM, 17th July 2023, About 3 years ago
The restrictions on deposit size and the time taken to evict non-paying tenants makes a guarantor important.
Just because a tenant is currently a high earner now, is of no use if they are made redundant or a relationship breaks down.
Member Since September 2018 - Comments: 3538 - Articles: 5
1:23 PM, 17th July 2023, About 3 years ago
Reply to the comment left by Chris @ Possession Friend at 17/07/2023 – 10:02
but if they pass referencing surely that’s the point – they don’t need a guarantor?
You would be hard pressed to find a guarantor for a 45 year old professional male who’s passed referencing for 30 times rent – do you really expect his parents to stand in here?
Everyone can loose a job at any time – nature of the beast, but referencing gives you a risk factor only for that moment in time. If you were that concerned you would take out rent g’tee insurance. Sometimes that is more costly than you think.
Member Since May 2016 - Comments: 1575 - Articles: 16
2:36 PM, 17th July 2023, About 3 years ago
Reply to the comment left by DSR at 17/07/2023 – 13:23which is precisely why a Guarantor is useful.
Most 45 year olds have parent(s) in their 60’s who have likely retired and own their own homes ( so you have something to claim against. )
Member Since July 2023 - Comments: 1
7:37 PM, 17th July 2023, About 3 years ago
There are bad and good tenants. There should be a reliable and timely court process to evict or make the tenants their rent and not take advantage of the long court process.
There also should be a rent regulation to avoid increasing rent unjustifiable.
This is all the government fault that does not regulate the rental market.
There are professional renters that should be reported as bad apples. Verifying credit or grantor doesn’t give the satisfaction that the tenants make their payments on time.
Member Since March 2023 - Comments: 1506
2:19 PM, 18th July 2023, About 3 years ago
Who guarantees the guarantor ?
Member Since May 2016 - Comments: 1575 - Articles: 16
2:21 PM, 18th July 2023, About 3 years ago
Reply to the comment left by GlanACC at 18/07/2023 – 14:19
Their property, which you can put a charge against.
Member Since March 2023 - Comments: 1506
2:26 PM, 18th July 2023, About 3 years ago
Reply to the comment left by Chris @ Possession Friend at 18/07/2023 – 14:21
You will be lucky to find a guarantor that would agree to that. Remember the lesson learnt by Amego Loans who used guarantors, practically none of them ever paid up
Member Since May 2016 - Comments: 1575 - Articles: 16
4:43 PM, 18th July 2023, About 3 years ago
That’s not the way it works. If a Guarantor is referenced and suitable. i.e. they have assets that can be claimed upon in default ( a property ) if a court order is made against them, a charge can be put on the property.
( A guarantor doesn’t specifically have to offer up their house as collateral )