What is a guarantor and who can be one?
Renting your property to new tenants can be a little daunting – even if you are an experienced landlord.
Whilst there are many checks in place that help to prevent unreliable tenants from renting, sometimes extra assurance is needed to make renting a safe and reliable process for all parties. If you have any reservations about renting to prospective tenants, or are worried that they won’t be able to pay the rent, then you should consider using a rent guarantor.
If you’re unsure of what a guarantor is or when you can request one, then read Hamilton Fraser’s helpful guide below, where we outline all you need to know about the subject.
What is a guarantor?
In the simplest terms, a guarantor is someone who can guarantee rent payments and other rent obligations for tenants. Having a guarantor helps to protect and ensure rent payments should the tenants fall into arrears or default on the tenancy agreement.
For tenants, having a guarantor can provide security and peace of mind. They can enjoy the safety net of guaranteed financial support rather than borrowing and repaying a loan.
Who can be a guarantor?
Usually, the minimum age requirement for a guarantor is anyone over eighteen or twenty one years old. As long as they are a UK resident, can cover the cost of rent, have a good credit history and are able to provide a satisfactory credit report they can be considered. Finally, guarantors are often required to be homeowners themselves.
For many tenants, this means asking a parent, family member, relative, or friend to agree to be a guarantor. If a tenant can’t find someone to act as a guarantor they can opt to use a rent guarantor company.
Rent guarantor companies act in the same manner as a UK resident guarantor and are ideal for international students, people in receipt of benefits and other parties who can’t provide a suitable guarantor.
Get a landlord insurance quote
Get a quote online in under 4 minutes
How much does a guarantor need to earn?
The amount of money a guarantor needs to earn will depend on the individual requirements of the letting agent or landlord.
Some letting agents or landlords will only accept guarantors that earn three times the annual rental price of the property.
Some agents or landlords will simply need the guarantor to verify that their income is sufficient to cover the tenants’ rent.
Other factors can come into play including the guarantor’s credit history, the nature of their employment i.e if they are self-employed, whether they are a homeowner and how much money they have in their savings or bank accounts.
Does a guarantor have to be a homeowner?
Most letting agents and landlords require a guarantor to be a homeowner.
This could mean they own a property in the UK, but not necessarily.
Even if your landlord doesn’t need a guarantor to be a homeowner, it could improve the chances of having an application accepted.