Will RRA mean almost 50% of renters need a guarantor?
A surge in tenants who require a rent guarantor is coming to the post-RRA rental market
New analysis by Zero Deposit reveals that the proportion of local authority districts in which the average tenant is likely to need a rent guarantor to secure pass tenancy affordability checks could increase from one-in-five to almost one-in-two following the introduction of the Renters’ Rights Act which limits the financial protections landlords have at their disposal.
Zero Deposit analysed average rent prices and income across England and its local authority districts to identify where renting remains affordable under the commonly used benchmark that tenants should earn at least 2.5-times their annual rent*. The research identified the areas where average earnings fall below this threshold, increasing the likelihood that landlords will require a guarantor during the tenant vetting process.
The analysis shows how the average renter in England is likely to fall short of standard affordability requirements. With average rents currently standing at £1,438 per month, equivalent to £17,256 per year, tenants would typically need to earn at least £43,140 annually in order to pass affordability checks. However, average earnings across England currently sit at £41,859, leaving the average renter £1,281 below the required threshold.
Across England’s 288 local authority districts, tenants are likely to require a guarantor in 19.8% of locations due to average earnings failing to meet affordability requirements.
London is home to 22 local authority districts where average incomes fall below the affordability threshold, while the South East contains a further 21 such areas.
There is a strong chance that the reliance on guarantors is now increasing further following the recent introduction of the Renters’ Rights Act (RRA), due to its restricting of the traditional methods landlords have used to mitigate their financial exposure, requesting larger upfront rent payments as a way to reduce the risk of rent arrears, particularly when tenants failed to meet affordability criteria.
Indeed, pre-RRA data from the English Housing Survey shows that 21.5% of private renters pay more than one month’s rent in advance. With this option no longer available to landlords, many are expected to seek alternative forms of financial protection.
One such form could potentially be an increase to the affordability threshold, from 2.5-times income to 3-times income. If this becomes the new industry standard, Zero Deposit calculates that the percentage of LA districts in which the average tenant fails affordability vetting would increase from 19.8% to 47.6%, as average earnings in 137 local areas would be too low.
With the number of tenants who fail affordability checks increasing, and continued demand from those tenant groups who commonly face vetting challenges – such as the self-employed, students, and those with a limited rental history – the number of landlords and letting agents relying regularly on guarantors is set to surge over the coming months and years.
Sam Reynolds, CEO of Zero Deposit commented:
“While the Renters’ Rights Act is designed to improve security for tenants, it also significantly changes the way landlords manage financial risk within the private rental sector. With restrictions on upfront rent payments and fewer traditional safeguards available, landlords and agents naturally place greater emphasis on affordability checks and income protection when assessing prospective tenants.
As a result, we expect guarantors to become an increasingly common requirement for renters who fall outside standard affordability criteria, particularly younger tenants, overseas applicants, self-employed workers, and those moving to high-cost rental areas.
The challenge is that the traditional guarantor model is no longer practical for many renters. Not every tenant has access to a suitable guarantor, and even when one is available, the referencing and verification process can introduce delays at a point where rental properties move extremely quickly.
This is why we’re seeing growing demand for regulated alternatives such as Guarantor+. By combining regulated protection, instant decisions and fair value, Guarantor+ helps landlords and agents manage rental risk with greater confidence, while helping tenants to secure homes faster and with fewer unnecessary barriers. In the few months since launch, 24% of letting agent properties are available with this product.
In a market increasingly shaped by speed, compliance, and risk management, solutions like Guarantor+ keep tenancies moving, creating a more efficient, accessible, and dependable rental market for all.”
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