With pennies being pinched up and down the country, the concern of unpaid rent is a worry keeping many landlords awake and staring and the ceiling night after night.
Making sure you complete full and comprehensive referencing on your tenant is obviously a good way to start a relationship with as much information as you can, but even if you go into the agreement with your eyes wide open, that doesn't mean things can't change. Your reliably referenced tenant could still find themselves in a financial pickle, and that could well have a knock-on effect to you, and your finances.
So, what can you do? Well, many landlords find that asking tenants to source a guarantor can provide a safety net, should the going get a little tough. However, this is a serious legal responsibility and not to be taken lightly, so make sure you and your tenant understand the 'whys and wherefores of guarantors':
What exactly is the role of a guarantor?
A UK guarantor is someone who agrees to cover the payment of the rent if the tenant is unable to pay it for any reason. This can include if they simply stop paying, go bankrupt or even if they pass away. A guarantor has no claim to the property that is being rented unless specified in the agreement.
Can anybody be a guarantor?
No, there are certain requirements that a guarantor must meet in order to fit the bill. To qualify as a guarantor, an individual must meet the following criteria:
- Be between the age of 18 and 75
- Have a good credit history
- Be a UK resident
A guarantor can be a friend, family member, roommate, partner and/or live at the same address as the borrower. It is advised that the guarantor earn around three times the annual rental rate (this is a minimum figure).
In order to make sure that the person suggested as a guarantor is providing correct information, they will usually also undergo a referencing procure, similar to the tenant.
If you have more than one tenant named on the tenancy agreement, it may be worth considering asking each person to provide their own guarantor, who can financially manage that individual’s rent share – especially in the case of friends sharing a property. You can use one guarantor for the debts of all parties – this is known as taking ‘joint liability’, however it might be tricky convincing one person to take on the liability of an entire household!
What if my tenant can’t provide a UK guarantor?
Whilst this can be a little more tricky, it doesn’t have to mean the end of the road – and it happens fairly frequently. There are organisations available (such as HousingHand.co.uk) that are able to provide guarantor services to tenants who find themselves in this exact situation.
How do I get rent back from a guarantor if I need to?
The first step would be to contact the guarantor in writing, asking them to honour their pledge. Send an update of rent statement and proof of arrears – proof can be a bank statement and a rent schedule. Post this first class with proof of postage from the Post Office Counter, so you have a paper trail.
Hopefully at this stage they pay, if they don’t you can go to the County Court and file a money claim. You can decide at the court stage to file against the tenant or guarantor, whichever you believe you will have the best change of securing the outstanding rent from.
Ideally, you will never have to think about getting in touch with a guarantor, as nobody wants to think about rent going unpaid! However, in an absolute worst case scenario the guarantor could end up with bailiffs at their front door, so they need to be absolutely certain that they want to sign up for the role – make sure they understand exactly what is required of them to avoid any potential tricky conversations further down the line.
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