Who needs a guarantor agreement?

by David Asker

14:38 PM, 17th October 2019
About 11 months ago

Who needs a guarantor agreement?

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Who needs a guarantor agreement?

A guarantor is an individual who is agreeing to pay the rent if the tenant defaults on payments. Guarantors can often be necessary when renting to students or those in part time or low paid work, but any landlord can ask for a guarantor agreement if they feel there might be an element of increased risk taking on a tenant or the tenant doesn’t pass the credit checks the landlord or their agent has in place.

The guarantor must always see the tenancy agreement before signing, so if you are including it in the tenancy agreement it isn’t a problem, if you have a separate document then you should attach it to the tenancy agreement.

The guarantor needs to be in writing and many guarantees are made by deed, this means the agreement is signed by all parties and the signatures are witnessed. This means that the signatures cannot be forged by the tenant to gain the tenancy of the property.

Who can be a guarantor?

A guarantor is often a family member of the tenant, but this doesn’t always need to be the case. Anyone can be a guarantor, but the guarantor will often need to fulfil the following requirements:

  • Be a homeowner
  • Prove they earn 2.5 x the monthly rent
  • Have a good credit rating
  • Be a UK resident

When does the guarantor agreement end?

The agreement ends when the fixed term tenancy ends. The agreement can be extended beyond the fixed term, but this must be agreed with the guarantor, as they may wish to not continue as guarantor after the fixed term has ended.

If there is any change to the rent or to the terms of the tenancy agreement, then the guarantor agreement becomes unenforceable.

Guarantor agreements offered by companies

There are companies offering a rent guarantor service, these rent guarantor services typically charge the tenant a one-off fee equating to 3-4 weeks rent.

University guarantor schemes

Some colleges and universities offer rent guarantors schemes for their students: the student tenant will need to apply for this.

Enforcement

If the tenant falls into arrears, then the responsibility to pay the rent falls upon the guarantor. If the guarantor doesn’t pay up then the landlord may obtain a County Court Judgment by submitting the relevant evidence, such as the signed deed.

This CCJ can then be transferred up to the High Court and the enforcement process can begin once you’ve obtained the writ of possession.



Comments

The Forever Tenant

15:21 PM, 17th October 2019
About 11 months ago

I was a guarantor for a friend of mine once.

I found out 6 months into their tenancy that they didn't pay their rent, not even once.

I will never be a guarantor again.

Puzzler

10:54 AM, 19th October 2019
About 11 months ago

Reply to the comment left by The Forever Tenant at 17/10/2019 - 15:21
I take it you were forced to pay up? I wonder why it took six months before the landlord got in touch with you.

This is a very good post. Many people think that agreeing to be a guarantor is much like giving someone a character reference. It isn't - the guarantor is contractually committing to paying the rent if the tenant defaults.

I don't know about it being unenforceable if the rent changes, I am fairly sure the agreements I have signed for young relatives covered that eventuality and for after the fixed term. One even covered my estate's liability if I died while the tenants were in residence!

Old Mrs Landlord

15:24 PM, 19th October 2019
About 11 months ago

The landlord has a moral duty to spell out the obligations of standing as guarantor for a tenant to any prospective guarantors and ensure they fully understand. It is an unfair contract if one party does not appreciate the implications and has been given the impression that it is no more onerous than giving a character reference.

Puzzler

14:31 PM, 20th October 2019
About 11 months ago

The landlord's morals are not relevant, anyone who is asked to be a guarantor should obtain their own legal advice not rely on the landlord to explain it. If the guarantor is naive then that would be difficult to prove and costly. An unfair contract arises from unfair or unreasonable terms not from being ill-advised or ill-informed. There are many referencing companies that do this and they do explain quite well (for those reasons) but as the first reply shows not everyone is aware what they are comitting to.

Puzzler

14:35 PM, 20th October 2019
About 11 months ago

We have lost the grace period for editing again....committing....

The Forever Tenant

20:46 PM, 20th October 2019
About 11 months ago

The crazy thing was is I knew the implications, I just didn't expect them to actually be required.

The couple I did it for are actually pretty well off. The wife had just moved over from Israel so had no credit report over here so the letting agency asked for a guarantor.

I thankfully ended up getting paid back when I reported to her parents what she did. Still meant that I had to come up with some £6,000 at short notice before that.

Puzzler

8:25 AM, 21st October 2019
About 11 months ago

Reply to the comment left by The Forever Tenant at 20/10/2019 - 20:46
So why was it six months before they approached you?


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