We are now in a completely different operating environment

We are now in a completely different operating environment

10:09 AM, 28th October 2020, About 11 months ago 21

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In the past, if someone was in a reasonable job, I was willing to risk taking them on without a guarantor. In fact, it seemed rude to ask a professional in their 30s or 40s for one. The worst thing that could happen would be me losing about 6 months rent – which I may or may not have been able to somehow claw back later.

We are now in a completely different operating environment. I now prefer to let a property remain vacant even for a month or two if necessary, in order to wait for the least risky tenant with a homeowner guarantor. Far better to lose one or two months’ rent now than run the risk of losing 2 years or more rent if the tenant decides not to pay the rent.

Some prospective tenants are initially annoyed when they are asked for one. One wrote to me: ‘a guarantor for a £500 house?’ Others say ‘I am a mature professional. I don’t need a guarantor.’ But if I get no rent on the £500 house for 2 years I am down £12,000, not to mention the legal fees and stress. JUSTICE FOR LANDLORDS! – Property118  So, yes, guarantor, please.

I also find, however, that most prospective tenants are quite understanding about it, once it is explained to them, as I did to one today: ‘Unfortunately, due to recent Government legislation which makes it very difficult to evict any tenant who decides not to pay the rent, we have to have a guarantor as a safety net.’  The single mother of two girls said ‘yes, I understand completely.’

Just like other Government legislation supposedly to ‘protect renters,’ this is having the diametric opposite result and is awful for would-be decent tenants, whilst the rogues are protected.  When will the Government realise that all their interfering is creating havoc and misery for tenants as well as landlords?



Comments

by Robert Mellors

14:20 PM, 28th October 2020, About 11 months ago

Reply to the comment left by Sunrise at 28/10/2020 - 14:05
Depends on the wording on your guarantor documentation. NRLA has I believe just updated theirs so that the option to end the guarantee is removed.

by DALE ROBERTS

14:23 PM, 28th October 2020, About 11 months ago

Reply to the comment left by Robert Mellors at 28/10/2020 - 14:18
Absolutely agree!
Especially considering that rent guarantee cannot be "guaranteed" at the moment.
But the earnest puff of righteousness from a young and eager newbie agent did make me giggle.

by Robert Mellors

14:23 PM, 28th October 2020, About 11 months ago

Depends on the wording on your guarantor documentation (Deed of Guarantee). NRLA has I believe just updated theirs so that the option to end the guarantee is removed. If your Deed of Guarantee is not an ongoing commitment (potential liability) upon the guarantor, then you may wish to get a different Deed of Guarantee so as to protect yourself from this situation/risk.

by DALE ROBERTS

14:25 PM, 28th October 2020, About 11 months ago

Absolutely agree!
Especially considering that rent guarantee cannot be "guaranteed" at the moment.
But the earnest puff of righteousness from a young and eager newbie agent did make me giggle.

by Dylan Morris

17:55 PM, 28th October 2020, About 11 months ago

Why is it more favourable to have a guarantor who’s a homeowner over a non homeowner ?

by Kincavel

10:20 AM, 30th October 2020, About 11 months ago

Great post, thanks for raising this Rosalind and for all the comments, very helpful.

Can I ask what everyone's thoughts are on issuing a one year AST with a 6 month break clause and issuing a Section 21 Notice at the beginning of the tenancy or even at the six month date?

Has this been done by anyone?

Many thanks in advance

by Robert Mellors

10:41 AM, 30th October 2020, About 11 months ago

Reply to the comment left by Dylan Morris at 28/10/2020 - 17:55
In the worst case scenario, e.g. tenant refuses to pay the rent or causes significant damage to the property, and guarantor also refuses to pay, then you can obtain a legal charge on their property. The guarantor is not going to want you to force a sale of their home, so they will find a way of paying you what is owed. If they are not a homeowner, then you have far less leverage and they may continue to refuse to pay you, (particularly if they are become out of work or retired). The mere fact that their home is at risk, will ensure that they put maximum pressure on the tenant to pay what is owed, whereas without this they may not be bothered whether the tenant pays their debt to you or not.

by Robert Mellors

10:43 AM, 30th October 2020, About 11 months ago

Reply to the comment left by Kincavel at 30/10/2020 - 10:20
I don't see how this would be lawful, as I believe the s21 Notice cannot be served at the start of the tenancy.

by Landlord Phil

11:35 AM, 31st October 2020, About 11 months ago

It's great to see other landlords are thinking like I am. I absolutely insist on a guarantor now, no matter how good the tenant looks. Being honest, it's purely about having the security that I can put another party in court if I need to. Truly, government has shot themselves in the foot with regard to their supposed helping tenants policy. Many of us will now only take premium applicants, & there really isn't a shortage of them. They've spent squillions to sort out short term problems in the current climate. It would make so much sense to spend a little in creating a housing court that speeds up fair practice on both sides, but this government isn't keen on solving things in the long term. In fact I don't think it matters what colour your politics are, I don't think any of them have a clue about housing or how to make a good housing policy. I keep saying it & nobody listens, ask the professionals, the PRS, & they just might get an outline of a plan. Instead they seem to prefer chucking 20 million a year at shelter, that's so far helped nobody into a decent new home. Utter bafoons in my opinion. I suspect I have some sympathizers.

by Landlord Phil

11:41 AM, 31st October 2020, About 11 months ago

Reply to the comment left by Kincavel at 30/10/2020 - 10:20
Kincavel, I don't see a need to issue a 1 year ast. 1 have 15 on 6 month AST's then rolling onto periodic. They all know I value long term tenancies because I told them. It just allows us both a break after 6 months if we don't get on. I always explain this before the tenancy starts. Never had anyone disagree in 11 years. Stick to 6 month AST's is my advice.


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