Yes, landlords can ask their tenants for a guarantor at their discretion if they believe that they might need more security.
Landlords may want to ask tenants for a guarantor if the tenant has a poor credit rating, low or unstable income or any other risk factors that may indicate a lack of security. A key part of tenant sourcing is ensuring that the chosen tenant is financially stable and can guarantee rent payments.
If you’re a landlord struggling to source reliable tenants or want advice on how to set up tenancy agreements or a guarantor contract, we can help. At J Property Management, we are property management London experts working with hundreds of landlords to make their lives easier. Contact us today to discuss your specific needs!
Why Ask For A Guarantor?
If you want an extra level of financial security from your tenants, it might be wise to ask for a guarantor.
As part of tenant sourcing, you’ll need to run checks on your tenants to ensure financial stability. If you’re not convinced, you can request a guarantor. Running checks on the potential guarantor is also important to confirm that they are able to make the payments in the event that the tenant cannot.
If the landlord is happy with the chosen guarantor, they will need to provide a separate legal document for them to sign. This will outline the guarantor’s responsibility to pay rent if the tenant is unable to. At J Property Management, we can help you draw up watertight tenancy agreements and a separate guarantor agreement – making sure all parties understand what they’re signing.
When To Ask For A Guarantor
Here are some cases you may want to ask for a guarantor:
- The tenant has a poor credit rating or no credit history
- The tenant has low income
- The tenant is unemployed
- The tenant is self-employed or a freelancer (different income each month rather than fixed contract)
- The tenant is a student
- The tenant has no references or is renting for the first time
- The tenant has just moved to the UK from overseas
- The tenant is on benefits
Who Should Be A Guarantor?
Rather than a fixed set of requirements for a guarantor, it just needs to be someone that is able to make payments should the tenant be unable to pay. Landlords should check the guarantor’s credit history or proof of income and may also ask for references.
Usually an adult who can demonstrate a good credit rating and has a personal connection to the tenant is sufficient. This could be a relative or close friend of the tenant but can be anyone willing to cover them. As long as the landlord believes that they can cover any unpaid rent or damages in the event that the tenant doesn’t, that is enough.
Some landlords prefer to choose a guarantor who is a homeowner but that is personal preference.
There are also a rising number of companies offering guarantor services for international students and expats.
What To Consider When Asking For A Guarantor?
It is not essential to have a guarantor but landlords may prefer the extra level of security. If you think you might want a guarantor, consider the following:
Provide a legal document
If you decide to have a guarantor, they will need to sign a separate agreement. This is a legally binding document and it is the responsibility of the landlord to provide this and ensure that the guarantor knows what they are agreeing to.
Set your own criteria
There are no fixed criteria when choosing a guarantor so it is the landlord’s choice if they want to request anything specific such as a minimum monthly income or a guarantor who is a homeowner.
Don’t charge fees
If the landlord decides to use a guarantor, they should be aware that they cannot charge the tenant nor the guarantor for running additional checks or drawing up the agreement.
Ensure everyone’s on the same page
The landlord needs to ensure that the guarantor understands what they are committing to before they are signing. This should be laid out clearly in the contract.
Are There Any Risks of Using A Guarantor?
As a landlord, there is minimal risk to using a guarantor. With a guarantor, they are agreeing to take on the financial responsibilities should the tenant be unable to pay for any reason. This actually minimises risk for the landlord as it ensures that, whatever happens, they will receive money for rent and any damages.
The only instance in which it may be risky for the landlord is if the guarantor is not financially stable or is unwilling to pay. Though an unlikely scenario, this could result in unpaid rent, lost money and potentially money spent on legal fees. For that reason, it’s crucial that the landlord runs checks on the guarantor, makes them sign a legally binding document and ensures that the guarantor understands what they’re signing.
If you want to make sure that the guarantor checks are carried out thoroughly and that the guarantor agreement is drawn up properly, we can help. At J Property Management, we can source reliable tenants for you and our team of experts is on hand to help with any queries about potential guarantors. We can handle the legal stuff for you to make sure everything is in order.
How Landlords Can Minimise Risks With Guarantors
Landlords can protect themselves when setting up a guarantor by following these steps:
Thorough guarantor assessment
Take the time to check that the guarantor is financially stable, looking at their credit history and income.
Draw up a clear guarantor agreement
The guarantor agreement is an important legal document and, as such, needs to be properly drafted and legally sound.
Signed by all parties
The landlord must make sure that both the guarantor and tenant sign the tenancy agreement properly.
Good communication
Make sure any issues are addressed early on. Talk to both the tenant and guarantor at the time of signing to ensure that everyone is on the same page and understands the implications for them personally.
Source Reliable Tenants & Trustworthy Guarantors with J Property Management
As a landlord, your biggest priorities are getting paid on time and in full and that your property is in good hands. That’s why sourcing the right tenants is crucial. At J Property Management, we work with landlords all over London and the UK to help them get reliable tenants who will look after your property with great care and pay rent on time.
We’ll help you draw up watertight tenancy agreements and legally binding guarantor agreements for an extra level of security.
Contact us today to see how we can help.
