Guarantors

[new mother]

Wise forumites, If you rent out a flat, do you typically ask the parents for a guarantee of rent? if notthe parents, who? The employer? I am asking as a friend is renting out for the first time and I have just read something about tenants not paying etc on the forum. Many thanks

[ClareC]

You tend to ask for a guarantor when the tenant fails the credit reference. Usually this is due to employment status, bad credit rating etc.

Anyone over 18 can be a guarantor. As a Landlord you want someone that has a good credit rating. Ideally somebody who has a permanent job and owns property/assets - ie someone who wouldn't wish to get a bad credit rating and can afford to pay the tenants rent!

An employer is highly unlikely to act as guarantor, to be a guarantor is a significant obligation. A guarantor is just as liable as the tenant for the debt.

[zeban]

My sister is my guarantor.

[guna nua]

The gaurantor is liable if the tenant defaults on the rent so it's not something to be taken lightly as circumstances can change and the gaurantor may be left with a huge bill including costs which legally they are liable for.

[DJKillaQueen]

I also recently helped a tenant bring a landlord to court and the letting agency they used after the landlord behaved illegally with regards to late payment of rent, including harassment of the guarantor.

At the end of the day, if you rent property, as with any business, there is a risk that you won't get paid sometimes.

[zeban]

Good for you DJKillaQueen. I've had a landlord harassing me before for because he thought I hadn't paid the rent. He knew I was a young female, lived on my own, and was in a vulnerable predicament but threatened to throw me out if I didn't provide proof of payment, told me he was not going to renew my contract (which he knew he was entitled to do) and kept calling me on my mobile. And I had paid my rent! He was obviously raking so much money in that he couldn't keep track of the odd ?600!

new mother- if asking for a guarantor, you just need someone with a stable job and income and who gets a good credit reference. Please don't ask for someone who owns a property- not all people own a property in London. Nobody I know well who would be my guarantor does, including my parents but that certainly doesn't leave them on shaky grounds to be my guarantor. So in doing that you're excluding some tenants being able to rent the property who will most likely be good tenants.

Most agents ask for someone earning a certain amount depending on the amount of rent the tenant will be paying. For example, ?23k for ?700 a month or something like that. A guarantor is also quite good for someone whose self employed if they haven't sorted their taxes yet.

[ClareC]

All comes down to risk..... If a guarantor has assets they are a safer bet. Still potentially takes a number of months and legal costs to go through the courts.

As a LL you need to be able to pay all the bills, mortgage, insurance etc in the absence of receiving rent in addition to financing the legal costs.

On a positive note, I've rented a house out for around 8 years now and only had this happen once. I don't think it's particularly common just something to be aware of since the knock on effect could be significant depending on LL personal circumstances.

[KidKruger]

new mother - You look at who the tenant is in terms of risk and assess whether you feel confident enough to run without a guarantor.

I have a single Mum as a tenant who needed council assistance for her deposit and first month's rent, so I asked for a guarantor, who turned out to be the tenant's Mother. This was a sensible approach seeing as the single Mum worked part-time on extremely low wages.

[binary_star]

You can ask the tenants to suggest a guarantor? It's usually a family member since they'd be liable for however much rent the fixed term is for - if you think even a studio flat could be ?1000/month so over a 12 month contract, they'd be liable for ?12000 if the tenant did a bunk. I can't see an employer signing up for that!

My brother was my guarantor for a flat I got straight out of Uni when I failed the credit check. He of course had to pass a credit check - no point using a guarantor if they're also a financial risk...

If the tenants pass the credit check, I don't see why you would need a guarantor. I certainly wouldn't now expect to need a guarantor as a solvent adult.

[KidKruger]

In the case I describe above I did not do credit checks it was someone with low income and she asked if I'd accept her Mother as guarantor. I had no issue with that, she'd 8 years in a previous place with good recommendations from previous landlord who was demolishing the property due to subsidence.

No credit checks at all, went by instinct and referrals.