On various occasions I’ve had prospective tenants ask me what they should do if they’re unable to get a rental guarantor. Personally, as a Landlord, I would feel extremely uncomfortable about giving tenancy to anyone that couldn’t arrange a Guarantor. Why? Because I’d only be thinking the following…
Why doesn’t anyone trust this person enough to be their Guarantor?
Of course, that’s just me being cynical (by nature). There are potentially endless amounts of genuine reasons why someone is unable to arrange a Guarantor. However, regardless of the justifications, it’s still a problem for Landlords. Or at least, it should be a problem.
As a tenant, I imagine it’s extremely frustrating to be deprived from renting a property because of an external factor like the inability to arrange a Guarantor, because at the end of the day, the lack of Guarantor isn’t really a reflection of how good or bad someone will make as a tenant. But unfortunately, they are rather necessary for the landlord’s own security. Landlords need to put certain security measures in place to secure their investment.
Most letting agents should require tenants to have a guarantor, but ultimately it is down to the Landlords discretion. If a landlord wants to take on tenants that don’t have a guarantor, they can do so at their own risk.
How to substitute for a Guarantor
There are ways tenants can try to persuade landlords to consider accepting their tenancy without a Guarantor. I’ve found that the methods I’m about to discuss work quite well.
A Guarantor is all about providing the landlord with a sense of security. A landlord wants to know that if their tenant falls in arrears or damages the property, he/she has a security cushion to soften the blow. So as long as a tenant is able to provide a substitute form of security, then the landlord might be willing to make a compromise.
Method 1- Rent Guarantee and Legal Expenses Insurance
A prospective tenant could suggest paying for a rent guarantee and legal expenses insurance policy. What is that exactly? It’s an insurance policy for Landlords that covers rent if tenants fall in arrears. Additionally, if the tenant runs up any legal costs (e.g eviction costs), then the insurance company will insure the costs.
I’ve got policies like this in place, and have actually had to claim before when my tenant fell into arrears. It’s actually a pretty good substitute (if not better) than a guarantor. However, I recommend having both in place. Policies can vary in price, but it cost me approximately £120 for a year, which I think it pretty damn good.
If you, as a tenant, are willing to pay that extra insurance cost, it maybe just enough to clinch the property you want to rent, without a guarantor. Here’s more details on Rent Guarantee And Legal Expenses Insurance.
Just to clarify, landlords can take this out at their own will, and many do.
Method 2- Increase the security deposit amount
Another way of persuading the landlord is by increasing the security deposit amount.
Security deposits are most often used for the following:
- to clean the property at the end of the lease term, if the tenant did not leave the property in a clean condition;
- to pay utility bills, if the tenant did not pay the bills; or
- to pay rent, if the tenant did not pay the rent.
In order for a tenant to persuade the landlord, he/she could offer two months worth of deposit, as opposed to the regular one month. This should provide the landlord with a better sense of security.
It’s also important for tenants to be aware of the landlord’s legal obligation to secure the deposit into a Tenancy Deposit Scheme. This means that the landlord won’t be able to unfairly keep the deposit at the end of the tenancy- which is an important security measure for tenants if they’re going to be paying more than the average deposit.
Method 3- Rent Guarantee and Legal Expenses Insurance & Rent Guarantee and Legal Expenses Insurance
If a tenant is in love with a particular property, and is willing to lick gum off the landlords shoe to secure the tenancy, then they could always combine the two methods; double the security deposit and pay for the insurance. While this particular method may significantly increase the initial costs of becoming a tenant, they should remember that they have the opportunity to regain the security deposit at the end of the tenancy (as long as they behave well), so the only real cost will be the insurance.
Method 4- Use a “Rent Guarantor Service”
I find this rather bizarre. But it’s out there, and it’s happening.
There are now companies out there that allow tenants to pay for a Guarantor. I suspect you may have to meet some requirements, they probably won’t provide guarantors in extremely high-risk cases.
I have no idea how it all works or what the costs entail (the price on the tin says “from £295”), but this website/service by Housing Hand, recently came across my radar. If you’re desperate and willing to pay for a Guarantor (presumably one that comes with good credentials), they might be worth checking out. In theory, the risk should be all on them.
Personally, I would accept either of those alternatives for a Guarantor as long as the tenant scores highly in other areas, such as good references from previous landlords and employers. But as mentioned, at the end of the day, it is ultimately down to the landlords own discretion. The landlord may even decide he/she doesn’t require a Guarantor. Of course, I would question the sanity of that landlord.