What Are Your Responsibilities as a (Tenant) Guarantor?
Unless otherwise stated in the contract, the harsh reality is that a guarantor agrees to pay the rent if the tenant doesn’t pay it. It doesn’t sound a very promising position to be in does it yet many people do volunteer to be one and many times it will not surprise you that things end in tears.
In this article we are looking at a (tenant) guarantor for private renters / tenants in rental property. So let’s start with why is a guarantor needed which usually boils down to helping a private renter to gain a tenancy in a property if they have been refused one – This can be for many reasons though mostly:
- They have poor credit history and zero credit history
- They are currently unemployed / in a low paid job / a student / renting for the first time
- They are from overseas and new to the UK
- They have poor references / history
When a private renter finds themselves being refused a tenancy this is where a guarantor can come to the rescue as they will sign a contract to guarantee the tenant will pay the rent and cover any additional costs such as cleaning / damages should there be any upon them leaving – if they don’t then it’s the guarantor who will cover these outstanding amounts.
Who can be a Guarantor?
In most situations the guarantor will be a friend or relative of the tenant though this can sometimes stretch to work colleagues, bosses etc. A guarantor can sometimes have a credit check carried out on them by the landlord, requested to show proof of savings / salary / property ownership / other financial details.
Sometimes a guarantor might not be accepted such as per the following:
- They are not over 21 (legal age to become a guarantor)
- They are senior / retired
- They are in poor health
- They do not live in the UK
- They have a poor credit history
Main risks when being a guarantor:
- You are liable to pay outstanding rent / end of rental term cleanings costs and repair work
- You could lose a good friend or relationship with a family member when things end sour
- You could waste a lot of time and money by back & forth paperwork / emails and receive court summons
- Your health can suffer especially stress related illnesses
So what is the benefit of being a guarantor?
- You can step in to help a friend or family member when they are struggling to get a tenancy
- You might be helping someone move from your property to another (mostly parents for their (young adult) children)
- It can build a stronger relationship between friends and relatives who will appreciate your help
Responsibilities of a guarantor:
- To sign the guarantor contract*
- To offer a potential amount upfront to cover deposit / initial rental charges
- To cover outstanding amounts owed to the landlord should the tenant fail to pay
* The contract is the all important document here and the guarantor needs to study it fully. Most will be of standard format though you need to look out for any special clauses or:
- Length of time for the contract (usually for 12 months) and there after what the terms are (usually rolling monthly contract)
- What the guarantor is liable for to include cleaning charges / repair works at end of tenancy agreement
Questions you need to ask yourself before becoming a guarantor:
- How well do you know the tenant? Is there a strong trust / respect between you?
- Are you prepared, in the worst case situation, to fall out with the tenant?
- Do you fully understand the responsibilities of being a guarantor?
- Have you the finance to cover the costs should rent arrears occur or repair works are needed (think about not only now, but for the length of the contract)?
- Can you cope with the time and stress involved with sorting out any disputes?
- Do you realize that apart from personal satisfaction, there is zero reward for being a guarantor?
Liaison services between Tenant Guarantor and Landlord:
Regular questions I get asked are:
“Help, I am a guarantor for a tenant and they haven’t been paying their rent – I am being asked to pay and I haven’t the money to do so (or I don’t want to pay out any money more so).”
“How do I get out of being / can I stop being a Guarantor for a tenant?”
I have been called many times to help out people who have signed up to being a guarantor (nearly always a water tight contract is signed by the guarantor along with the landlord / management agency and a third party witness (latter not always required). Each time I have been called by a concerned guarantor it is because the last month of two of rent has not been paid or that damage to the property has occurred which surpasses the held deposit (most times 1 month / 1.5 months rent). The guarantor has signed a legally binding contract and now the worst case has happened and they are panicking as they are liable to pay out money.
In this situation it is always best to start communicating instead of hiding away:
- Contact the tenant to find out the current situation and reasons for any rental payment defaults. Maybe it is temporary, maybe it’s a job loss, health issues, family death etc.
- If you can not reach the tenant by phone, try emails / messages on social media / visit to the property / post a recorded letter.
- Speak to the landlord / agency and see what money is owed and if required, suggest and agree to serving a tenant eviction notice (or this can be immediate if the tenant is seen to have already vacated the property (in depth reading on the government website – Section 21 and Section 8 notices))
- At all times, remain calm. If you can, wear a body camera when on site. If you can, take photos. Save emails / voicemails / letters and more relating to the case.
- Once you know the outstanding costs you can decide to pay them (this might include up to the end of the contract term of the standard two month eviction notice period or whatever obligations are stated in the contract).
- You can try to negotiate, especially useful if you have poor finances. See if an upfront lump amount is acceptable instead of having to go to court and both parties suffering time and financial costs. A lump sum is also better than having to set up tiny amounts payable monthly over several months or even years.
- Be open and honest and especially with the landlord as they are not all greedy people and many will take in to consideration your circumstances.
- Call in the help of a third party / mediator who has the experience of difficult tenant vs landlord vs guarantor situations and can work to communicate between all parties to arrive at an acceptable conclusion for all.
- It is important to remember though that what you legally signed up for as a guarantor is that you are financially liable – It is not the fault of the landlord should the tenant not pay and that they come after you for the owed money.
Do you need help with your guarantor contract / tenant?
The service that I offer is a liaison between guarantor and landlord (sometimes tenant too) so to arrive at a suitable outcome that sees all parties satisfied and paid without the need for lingering court cases / monthly payment instalments.
They are many solutions to these fairly common situations so do not get yourself too stressed out.
“My last case saw a cash lump sum accepted by the landlord, that was below the outstanding fee requested, from a senior guarantor who was unfortunate to see the tenant vacate unknowingly leaving two months unpaid rent and a large cleaning bill. This lady guarantor was suffering from recent poor health and the stress from the lingering situation was causing more health issues. Thumbs up to the considerate landlord for reducing the (legally) owed costs to them on this occasion.”
Call Christopher via 07917 434943
Title image: Pixabay