The Ultimate Guide to Using a Guarantor
If you’re thinking of renting a new home, you’ll be required to pass tenant referencing and credit checks.
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One of the requirements of tenant referencing is that you earn 2.5x the annual rent.
Example: If the property’s rental price is £15,000 per year, you’ll need to earn at least £37,500 annually.
However, not all renters meet the requirements when it comes to annual income, which can leave them in a sticky situation. So what’s the answer? Walk away from your dream home and look for a more affordable option?
Fortunately, there is still a way to rent a property even if you don’t meet the overall requirements. A guarantor can offer financial protection to the landlord, stepping in to pay rent if you’re unable to meet the monthly amount.
But how do you get a guarantor and which requirements should they pass to guarantee the rent if you can’t? In this article, we’ll explain the guarantor’s role, the boxes they need to tick, and how they can help you land your next home.
What is a guarantor?
A guarantor is someone who guarantees your rent should you suddenly find yourself in a position where you can’t make the payments. Depending on the rental agreement, a guarantor may also need to cover damages that could occur while you’re living in the property.
It’s a legal obligation to clearly state the guarantor’s role in the rental agreement. Once signed, it’s their duty to comply with the contents of the contract. This means the guarantor should always read the agreement ahead of time, so they are fully aware of everything their role entails.
When will I be asked to provide a guarantor?
In many cases, if you earn more than 2.5x the annual rent, have a stable job and decent credit, a guarantor shouldn’t be required. However, it’s at the landlord’s discretion whether or not a guarantor is needed. In the majority of cases, students or renters who have a poor credit score will be asked to supply a guarantor.
Other reasons may include:
- Having no credit history in the UK
- Being a student or renting for the first time
- Being unemployed or having a low income
- Moving to the UK from overseas
Who can be a guarantor?
If asked to provide a guarantor, there are various requirements that need meeting. In some cases, the guarantor will need to earn more than 2.5x the annual rent. It can be as much as 3.5x, though it’s the landlord who decides.
- Be over the age of 21
- Live in the UK
- Have a good credit history
Being a homeowner will also add more credibility to their application. In most cases, a guarantor is a relative or a close family friend. Legally, however, your guarantor is not required to be a relative or close friend.
Does my guarantor have to live in the UK?
More often than not, landlords require guarantors to live in the UK – though they could make exceptions in some cases. Having a UK-based guarantor makes it easier to pursue claims should the need for a guarantor arise.
Can I change guarantor during my tenancy?
Unless stated in the guarantor’s agreement, the selected guarantor will remain the same until the tenancy changes or comes to an end. Tenancy changes include rent increases or change of tenants (in a flatshare), but do not include changes to misspelt names or other minor edits. The guarantor’s agreement should always specify such details.
To change guarantor during a tenancy, the guarantor or tenant must contact the landlord to discuss the possibility of this change. This is necessary as it will often require the drawing up of a new guarantor, and potentially a new tenancy agreement.
What happens if I can’t provide a guarantor?
Some landlords may accept larger deposits (e.g. an extra month) if you have only recently moved to the UK. In some cases, they may also accept a family member who is living abroad, though this is less likely.
If you are a student, contact your university, college or student union. They may have a guarantor scheme or an advice centre that provides you with support specific to your personal situation.
There are also charity schemes you can apply for, which provide opportunities for care leavers or those with no relationships to relatives (check out the Unite Foundation Scholarship Scheme for eligibility).
Additionally, you can also pay private guarantor schemes, which typically consist of private companies that offer to be your guarantor.