As a tenant, you might be asked to provide a guarantor for your tenancy. A guarantor is someone who guarantees the rent on your behalf. They are responsible for the rent on your home. If you don’t pay the rent, your guarantor will be chased for payment.
Why do You Need to Provide a Guarantor?
There are several situations where you might need to provide a guarantor. If you’ve never rented before, and this is particularly true for students taking on their first digs, parents or guardians will be expected to act as a guarantor in most cases. You will also most likely be asked to stand a guarantor if your income is low or difficult to prove, if you haven’t rented before, or if your landlord doesn’t think you can afford the rent. There no laws regulating whether a landlord can ask for a guarantor: it’s up to their judgment.
Does a Guarantor Have to Satisfy Any Conditions? Does a Guarantor Have to be a Homeowner?
A guarantor will have to satisfy a landlord or letting agent that they are who they say they are and capable of covering the rent, and also it’s usual that a guarantor will be a homeowner. The guarantor will have to provide documentary evidence of their status and also sign an agreement to cover the rent.
How Does a Guarantor Prove Their Income?
A guarantor will be credit and affordability checked in the same way a tenant would be. They will have to detail their income and outgoings so it is clear they can cover the rent should the tenant not do so.
Can a Guarantor be Self-Employed?
We’ve heard that some lettings agents will apply even more stringent demand onto guarantors. One example we heard required a guarantor to be a UK-based homeowner with a provable income of £25,000 (and that had to be income, savings were not taken into account). Pensioners and self-employed people were not allowed to stand as a guarantor. The guarantor was also required to offer three months bank statements as documentary evidence of their income. To add insult to injury, registering the guarantor in question set this tenant back £100.
Can a Pensioner be a Guarantor?
A guarantor must be able to cover the full rent should the tenant be unable to do so. Therefore, a pensioner who has a high enough income could be a guarantor, for example if they have an income from buy-to-let themselves. Some agents will specify an upper age limit of 75 for a guarantor.
Remember these are specific examples and won't necessarily represent your situation. Many agents and landlords will accept self-employed guarantors, or won't require a homeowner guarantor. If you think you're likely to need a guarantor it is worth asking what conditions they need to meet prior to going through the referencing process. Also remember that the landlord may have to meet certain conditions for their buy-to-let mortgage terms and conditions or to validate their rent protection insurance, so landlords who might seem to be being difficult regarding you needing a guarantor are more than likely just protecting their own backs.
The above highlights why dealing directly with a private landlord is probably preferable when sorting out a guarantor. They’ll probably be satisfied with proper bona fides and a signed agreement.