Online Guarantor?

by Readers Question

9:43 AM, 11th August 2020
About 2 months ago

Online Guarantor?

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Online Guarantor?

In trying to let a small property recently I have had a lot of applicants who can’t meet the affordability and or credit criteria.

A few have asked if I would accept an online guarantor which they would have to find £40+ a month for.

I’m curious to know if anybody has heard of this option before, utilised an online guarantor and what your thoughts are regarding this?

Many thanks

TC

 


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Comments

Gary Nock

10:43 AM, 11th August 2020
About 2 months ago

Keep well away. The onus is on the tenant to renew it after the end of the fixed term. If they don't then the guarantor cover ceases. And if a tenant can't find a guarantor then it says something about the tenant.

Hardworking Landlord

10:49 AM, 11th August 2020
About 2 months ago

Never heard of it, but I have to say in the current climate, I would not take on a tenant that had any risk in their profile. Bear in mind that you have almost no recourse these days if things go wrong.

Ian Narbeth

10:57 AM, 11th August 2020
About 2 months ago

Hi TC.

We haven't used them or had tenants who have. As with any guarantee, check carefully who the guarantor is. A Google search for online guarantor for example threw up https://www.rentguarantor.com/about-us and a search at Companies House https://beta.companieshouse.gov.uk/company/07913370/filing-history
As at 31 December 2018 shareholders funds of minus £1242. Not picking on them in particular, Just the first one that came up.

Second on the list is Housing Hand Ltd T/A UK Guarantor. Better accounts: https://beta.companieshouse.gov.uk/company/08408808/filing-history but not the solid balance sheet of an Aviva or a Swiss Re. Absent a P+L account it is impossible to see their turnover. Profit for 2018/19 was £144K against a similar sized loss the previous year.

The Forever Tenant

10:57 AM, 11th August 2020
About 2 months ago

I've heard about them, kind of like an insurance policy. Tenant pays an amount each month, company pays out if they don't pay rent. I believe this to be the case but never had to use anything like it.

As for tenants with risk, I do think that following everything that is going on right now, that the amount of tenants with no risk is going to dwindle. I honestly think that most will end up with something adverse.

Ian Narbeth

11:01 AM, 11th August 2020
About 2 months ago

Reply to the comment left by Gary Nock at 11/08/2020 - 10:43
Fair point about the tenant renewing the guarantee, Gary. Might be different for student market where the tenant won't stay on but see my earlier post about creditworthiness of the guarantors. These insurance-based solutions will become more prevalent as deposits are capped and landlords seek additional security. I'd rather have a UK employed home-owner as guarantor than a small limited liability company with a flashy website.

Gary Nock

11:21 AM, 11th August 2020
About 2 months ago

Ian I looked at this ages ago. And was not impressed. Like you its UK based home owning guarantors or no tenancy. Must be doing something right as we let and manage 50 properties and we haven't had one default through COVID 19.

david porter

12:17 PM, 11th August 2020
About 2 months ago

We were offered this recently , it turns out that is was an insurance policy from Lloyd's. I did not think they could do financial guarantee business?
What about non disclosure of a material fact? What happens if the policy is not renewed?
What happens if the tenant does not pay the next month premium?
Suggest you improve the property and get a better quality tenant?

Andrew Honour

14:40 PM, 11th August 2020
About a month ago

We used Housing Hand as guarantor recently and was not a good experience. On two occasions rent was outstanding for over 4 months and took a solicitor letter to get them to pay. Even then they only paid two of the outstanding months.
As mentioned previously, UK employed, homeowner guarantor every time!

Rob Crawford

15:32 PM, 11th August 2020
About a month ago

Reply to the comment left by Ian Narbeth at 11/08/2020 - 10:57
This is probably the company in question: https://www.housinghand.co.uk/landlords-guarantor-service/ The "how it works" video is a little over simplified!

Ian Narbeth

15:56 PM, 11th August 2020
About a month ago

Reply to the comment left by Rob Crawford at 11/08/2020 - 15:32Thanks for that Rob. The video says the tenant will need a "Co-Signer", not a word on everyone's lips, but it means a guarantor of the tenant, i.e. someone who gives a guarantee to Housing Hand so they can call upon that person if a claim is made.
There is another problem.Their website says that "As acting guarantor, we mediate any disputes and ensure they are resolved quickly." Sorry, but landlords should not accept that the guarantor has a right to mediate. The guarantor is an interested party, not a neutral mediator.

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