Surge in demand for guarantors under Renters’ Rights Act

When we first started taking (homeowner) guarantors instead of a deposit NINETEEN YEARS ago, I distinctly remember saying that eventually Govt. would ban them. The more LLs take a guarantor and they’re ultimately made liable, the more likely that day is.

I am not sure that a guarantor is a substitute for affordability. It was previously used where there was no track record of income or previous rent payments or where a tenant may return overseas at the end of a contract.

Am I wrong in thinking that from now on, taking anyone who doesn’t meet the affordability criteria is a risk too far.

Reply to the comment left by Paul Essex at 11:04
During the run up to the Labour Renters Rights Bill (which is very different to what the Conservatives were proposing as its Rental Reform Bill) Shelter and a number of other housing associations either lobbied the government to ban guarantors or asked the government to severely restrict their use. The letter from Shelter is here:
https://assets.ctfassets.net/6sxvmndnpn0s/kM1F8baffXcezC3dmcDxR/daa444d84bc0dd577971a63e4ae561f4/Briefing_-_HoL_Cttee_-_Guarantor_Requests.pdf
What Shelter said was The Renter’s Rights Bill should restrict the scenarios in which a landlord can legitimately request a guarantor to those in which a prospective tenant cannot prove that the rent is affordable to them.
As a consequence of this letter Baroness Lister of Burtersett, a labour life-peer, tabled an amendment to ban guarantors. The amendment is here:
https://bills.parliament.uk/bills/3764/stages/19515/amendments/10019312
The amendment to ban guarantors was withdrawn, i.e. not passed as part of the Labour Renters Rights Bill. However, following the enactment of the Labour Renters Rights Bill withdrawing section 21 no fault evictions you are right in thinking that anyone who does not meet the affordability criteria is a risk too far. This is because labour did not publish its justice impact assessment on the impact on the courts, labour has not fixed the courts yet, and we do not yet know the impact of the Labour Renters Rights Bill on the courts. I.e. once a tenant is IN your property, there is no guarantee that you will ever be able to get them out, or be able to do remove them promptly if they cannot afford the property, do not get on with the neighbours or do not look after the property.

As for what happens in future Baroness Listers proposal gives you a hint as to what the future might look like if labour, the SNP or the Greens get into power, individually or as a coalition. Pat McFadden now famously is reported to have made this statement:
https://www.telegraph.co.uk/politics/2026/06/01/pat-mcfadden-all-labour-does-is-ask-who-can-we-tax/?msockid=0b8a4155c7db6ba1058955b1c6196a07
Labour cares only about who it can tax in order to pay more in benefits, a senior Cabinet minister complained to Lord Mandelson.
In summary, all the above means because of the implementation of the Labour Renters Rights Act, as a landlord you cannot take a chance on the high-risk tenants any more, where as previously you could because of the existence of no-fault evictions. And because of the Renters Rights Act ban on discrimination you have to apply those additional costs (as increased rent to cover those costs) to ALL tenants. I.e. the good tenants we all want have to pay for the bad ones none of us wants. The effect of the Labour Renters Rights Act is that it will push up market rent, this in turn will push up the benefit bill because Labour cannot house all the people who need homes without the involvement of the private rental sector. But at least if you apply more stringent affordability criterial to ALL TENANTS you should be one of the landlords who does not get stuck with a problem tenant and can actually get your property back when you need to.
The Labour Renters Rights Bill makes it illegal for either you or your agent to withhold information on the availability of a property or discriminate in favour of some tenants over others. What this means is that you have to apply more stringent affordability criteria to ALL tenants because you are already banned from charging only the higher-risk tenants for such things as credit referencing checks. The Labour Renters Rights Bill increases costs for all tenancies and the only thing that you can do to mitigate that is to put the rent up.

We are requiring more guarantors. The simple truth is that if a tenant stops paying rent and there is no guarantor, it is a problem and very likely becomes a serious problem for the landlord. If there is a guarantor, the landlord demands payment and the guarantor is in contact straightaway with the tenant. The tenant either sorts himself out or leaves.
If tenants do not know anyone who is a suitable guarantor, they can approach guarantee companies. These typically charge a premium of about one month’s rent.
Paradoxically, having assured periodic tenancies avoids the issue of, usually agents, trying to draft guarantees to cover all future tenancies and then finding, folllowing a renewal, that the guarantee does not work.

Reply to the comment left by Ian Narbeth at 02/06/2026 – 11:52
Out of curiosity, what credit-referencing criteria do you apply for guarantors, as opposed to tenants, and have you tightened these up as a consequence of the Labour Renters Rights Act?

Reply to the comment left by Ian Narbeth at 02/06/2026 – 11:52
Ian, could you expand on that very last paragraph/sentence, please? WHY is it it cannot extend to all future tenancies, and are you saying guarantors no longer work for the new Assured Periodic Tenancy or the opposite?

Reply to the comment left by Luke P at 12:43
I think the point Ian is making is that the courts frequently ruled that guarantor agreements were null and void if the tenancy was renewed. The RRA solves that because there are no fixed terms and therefore no need to renew tenancies.
Its interesting that the article raises the point I hear a lot, that its the prohibition on lump sum rent advances thats partially to blame for the increase in guarantor demands. With some very specific exceptions, (eg some overseas students), I can’t see how this would help under the RRA. Six or twelve months rent up front may have been a comfort when fixed terms of that length could be issued, but tenancies are now open ended and tenants more difficult to remove when the advance runs out. I’d also be more concerned about the tenant suddenly having to budget for a large rent payment each month after being used to all this disposable income for the first few months.

Reply to the comment left by DPT at 02/06/2026 – 13:04
So if that’s correct then potentially the guarantor might have to act as a guarantor in perpetuity. And as forever is a long-time that means the age, the assets, and possibly the estate of the guarantor become a more important consideration.

This Labour government is only making things worse every day for tenants as some landlords will just not let properties without a guarantor now. If you increase the rent though the guarantor could say I no longer wish to be a guarantor, then what. Also these deeds need to be drawn up or checked by a solicitor to ensure they can not be overturned in court .Therefore it becomes an expensive operation for the landlord.

That’s an important point. Under the Labour Renters Rights Act landlords are likely to be able to need to review and increase the rent to market rent, or in line with inflation, annually; even though previously many landlords did not do this as in the era of no-fault evictions renting properties out was lower risk and you did not need to care as much. The guarantor would need to know all that.

And if the guarantee is open-ended, effectively in perpetuity, I would have thought that it makes a difference whether the guarantor is 40 and earning £100k per annum, or 80 and on a pension, unless the guarantee is secured against a property and/or an estate, in which case, yes you would need a solicitor.