To draft a guarantor agreement, you must draw up a legally binding document that is signed by the tenant, the landlord or letting agent and the guarantor – a person who agrees to be financially responsible for the tenant.
A UK guarantor agreement is signed by the guarantor, the tenant, and the landlord or letting agent. The guarantor is the person who agrees to pay the rent if the tenant defaults, and they must understand the agreement’s terms and sign it willingly before the tenancy begins.
As a landlord, you may need to draw up a guarantor agreement to ensure that rent payments are covered – even if the tenant cannot pay. It’s an important step that landlords can take to safeguard themselves.
When drafting a guarantor agreement, it’s important that terms are laid out clearly and that everyone understands what they are agreeing to before signing. This can be difficult – especially if you’re a new landlord or requesting a guarantor for the first time.
At J Property Management, we are experts in helping London landlords manage their legal and financial responsibilities. From drawing up watertight tenancy agreements to drafting legally-binding guarantor agreements, we handle the complicated stuff for you. Contact us today to see how we can help you with your landlord responsibilities.
What Is A Guarantor Agreement?
A guarantor agreement for rent is a legally binding contract which states that the “guarantor” will take financial responsibility for tenant payments for the duration of their tenancy in the case that the tenant is unable to pay.
It is an added layer of protection for the landlord as it ensures that they have financial security in the event that their tenant cannot pay. For tenants, it means that their rent is covered by someone they trust and they won’t lose their home if they are unable to pay rent.
The guarantor confirms that they will pay the rent if the tenant cannot pay and will also cover any property damage.
It is a separate document from the tenancy agreement which is just between the landlord and tenant.
When Should Landlords Ask For A Guarantor?
Landlords can ask for a guarantor if they feel that they require additional financial security.
Certain tenants may be a red flag for landlords. Here are some of the times landlords may consider asking the tenant for a guarantor:
- Unemployed tenants or those on a low income
- Tenants without regular, stable work
- Those who are new to the UK (no credit history)
- Students
- First-time renters (no references).
What Must A Guarantor Agreement Include?
There is no specific format that a guarantor agreement must follow but it should state clearly any payments that the guarantor will be responsible for.
Other key details that must be included are:
- Date of the agreement
- Full names, signatures and contact details of the guarantor, the tenant and the landlord or letting agent
- Property address and details
- The specific lease term that the guarantor agreement applies to
- Guarantor’s obligations – what payments they are liable for and a maximum amount they are liable for (if specified)
- Duration of the agreement – the fixed lease term as well as any extensions
- Notification clause – stating that the landlord must inform the guarantor of any issues in writing.
It is important for the landlord that the guarantor’s responsibilities and financial obligations are clearly stated in the guarantor agreement. This will protect them in the case of future legal disputes.
The guarantor agreement should also be objectively fair. If the guarantor believes that the agreement is unfair, they could take the landlord to court.
Importantly, the guarantor agreement should be signed before the tenancy agreement.
Who Can Be A Guarantor In A UK Guarantor Agreement?
To be a guarantor for a UK guarantor agreement, the person must be over 18 years old and a UK resident. They will need to be financially stable so must have a good credit history and a steady income or demonstrable savings.
The guarantor is usually a close relative or friend of the tenant and must have known them for at least two years. Some landlords also prefer a guarantor who is a homeowner.
If the guarantor doesn’t fulfil these requirements or the landlord believes that they are not financially stable enough, they are also entitled to reject the guarantor.
What Does A Guarantor Need To Provide In The UK Before The Guarantor Agreement?
Being a guarantor is a position of high trust so it is important that they are thoroughly checked by the landlord, in the same way that they would check a tenant.
Usually, a guarantor in the UK would need to provide:
- Proof of identity (UK passport or driving license)
- Personal details
- Signature
- Employment history
- Legal history (demonstrating no criminal record)
- Existing address and previous addresses
- Bank statements or proof of savings
- Consent for a credit check (which they must pass)
- Character reference(s).
Who Signs A Guarantor Agreement?
A UK guarantor agreement is signed by the guarantor, the tenant, and the landlord or letting agent. The guarantor is the person who agrees to pay the rent if the tenant defaults, and they must understand the agreement’s terms and sign it willingly before the tenancy begins.
What Responsibilities Are Set Out In A Guarantor Agreement?
The guarantor agreement lays out exactly what the guarantor will be responsible for. This will vary between agreements but may include:
- If the guarantor is financially responsible for anything beyond unpaid rent (e.g. property damage)
- If the guarantor covers the whole tenancy or just one tenant in a shared accommodation arrangement
- How long the guarantor agreement lasts (e.g. for the fixed tenancy period or for future terms too)
- Whether there is a maximum that the guarantor will pay
- If the agreement covers changes to the tenancy agreement like rent increases.
Draft A Guarantor Agreement With J Property Management
With so much to consider in a guarantor agreement, the language is of absolute importance. The right wording can make all the difference if there are ever any legal implications.
At J Property Management, we are London property management experts – helping UK landlords fulfil their duties, including all legal compliance. We’ll make sure that any guarantor agreements are accurately worded, legally binding and that all parties know what they’re signing. We can also handle tenant sourcing to get you responsible, trustworthy tenants.
Talk to our team today to see how we can help you with your legal responsibilities.
