On various occasions anxious tenants have asked me what they should do if they’re unable to arrange a rental guarantor to help appease the demands of their landlord or letting agent.
The reality is, a guarantor is a prerequisite for every sensible landlord, and rightly so.
Personally, as a Landlord, I would feel extremely uncomfortable forming a tenancy agreement with anyone who is unable to 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, there are many genuine reasons that aren’t unnerving for why a tenant is unable to arrange a Guarantor. However, regardless of the reasons, a tenant without a guarantor is not a desirable proposition, just like going on a skiing holiday without insurance. It just doesn’t make good sense.
Why do landlords require tenants to have a Guarantor?
As a tenant, I imagine it’s extremely frustrating being refused a tenancy agreement because of an external factor like the inability to arrange a Guarantor, especially if you’re particularly in love with a property, and you’re willing to lick gum off the landlord’s shoe for it. Because at the end of the day, the lack of a Guarantor isn’t really an indication of how good or bad someone will be as a tenant. But more importantly, you’ve probably paid rent on time and every month in the past, so you can’t see the problem!
However, unfortunately, just because you haven’t had a thumble on the ski slopes in the past 20 years, it doesn’t mean holiday insurance is a woeful waste of time!
It’s all about risk management.
Landlords want you to have a guarantor in case life happens, and consequently you find yourself in a bind that results in financial tormoil. No landlord wants that to happen to their tenants, but it does. All the time.
Landlords, simply, want the assurance of a Guarantor (i.e. they want to know they have the option of turning to someone else to recover any unforeseen losses!).
Do tenants NEED a Guarantor?
It’s not a legal requirement or anything. I’m sure there are many
stupid landlords that don’t require one. In fact, I know there are! But ask yourself, should you trust a landlord that doesn’t require a Guarantor?
While some tenants may think they’ve got the hit jackpot when stumbling upon a landlord that doesn’t require a Guarantor, I’d personally be concerned. For the most part, good landlords require one. Would you jump into a car with someone knowing that they’re not insured? Or at least, would you feel safe doing that EVERY day?
If you’re dealing with a letting agent, you’ll find that most of them will require their tenants to have a guarantor, but ultimately it is down to the Landlords discretion. If a landlord wants to take on tenants that doesn’t have a guarantor on standby, they can do so at their own risk. So ultimately, the trick is to win over the landlord in many cases.
How to substitute for a Guarantor (i.e. how to look appealing without a guarantor)
There are ways tenants can try to persuade landlords to waive the need for a guarantor. I’ve found the methods listed below to 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 net waiting underneath. 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) Flaunt your positive rental history
Landlords love good rental history. In fact, it’s one of the most valuable attributes a tenant can personally approach me with.
If you’ve been a tenant for several years and can provide positive references from previous landlords, then make sure you do that! All good landlords will take references from previous landlords seriously, and then contact them for verification purposes.
Method 2) Pay rent in advance
There’s nothing more reassuring than a pile of cash.
Paying several months worth of rent in advance can definitely provide a sense of security that landlords crave. However, while it’s an easy fix, it’s not an option available for most tenants as they won’t have the funds to make such a grand suggestion.
But, if you do have the cash laying around, this could be the solution.
Method 3) Rent Guarantee and Legal Expenses Insurance (RGI)
You 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 ever fall in arrears. Additionally, if the tenant runs up any legal costs (e.g eviction costs), then the insurance company will cover the expenses.
Many landlords buy this policy as standard (just to feel safe), but plenty of them don’t. In any case, you could make the gesture of covering the expenses for the policy.
Ideally a landlord will have RGI and a Guarantor in place, but I actually think this solution is the best like-for-like replacement in those cases where a Guarantor is absent.
I’ve got RGI policies in place for a few of my tenants, and I have actually made a claim in the past when my asshole tenant fell into arrears quite a while back. RGI definitely is handy and comforting.
RGI policies can vary in price, but it cost me approximately £120 per year, per policy, which I think is a pretty sweet deal if you’re able to convince your landlord to accept the replacement.
Word of caution: some RGI providers may require the tenant to have a guarantor in place before they’re willing to provide cover (sound familiar? Seems like everyone is at it!). However, not ALL of them do, so you may have to shop around for a provider that will accept your circumstances and notify your prospective landlord of the provider so they can take out the policy.
Here’s more details on Rent Guarantee And Legal Expenses Insurance.
Method 4) Increase the security deposit amount
Another way of persuading the landlord is by paying a larger than necessary security deposit. Instead of paying the standard 4 weeks of rent which the landlord is asking for, offer to pay 8 weeks worth.
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.
Unfortunately, this option isn’t viable for tenants in England anymore, because ever since the introduction of the Tenancy Fee Ban in June 2019, landlords in England have been capped to accepting a maximum of 5 weeks rent. What a shame! Even if you pay the maximum amount of 5 weeks when a landlord is only asking for 4 weeks, it’s unlikely to carry any weight!
Method 5) Use a Rent Guarantor Company/Service
I find this rather bizarre. But they’re out there, and it’s happening. And apparently they’re becoming incredibly popular.
There are now Rent Guarantor Companies out there that provide the service of being a Guarantor for complete strangers, whether they’re a student, in employment, in receivership of benefits, or even plagued with poor credit history or CCJs.
I suspect you may have to meet some requirements, and they probably won’t back extremely high-risk cases (but I could be wrong).
I have no idea how it all works, but below I have listed a couple of the most popular companies in the UK that offer Guarantor services.
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BTW, if anyone does use one of the Guarantor Companies above (or any other), please let me know what your experience was like, and what the process and requirements were! It would be interesting to know.
Students and the University Guarantor schemes
Quick note for students!
Your university or college may provide a rent guarantor scheme, which means they could act as your guarantor to help you become a private renter.
If available, you will have to apply for the scheme and meet certain requirements to be approved. For example, you might be required to have a satisfactory academic record, and provide proof of income, which is sufficient enough to pay the rent.
To find out if your University or college offers a guarantor scheme, you should enquire with the relevant accommodation service or search their website for further details.
Personally, I would accept applicants without a guarantor if they could make me feel secure in other ways.
But as mentioned, at the end of the day, it is ultimately down to the landlords own discretion.
Goodluck, folks! xo
Disclaimer: I'm just a simple landlord blogger; I'm not qualified to give legal or financial advice. Any information I share is my opinion based on my personal experiences as an active landlord, and should never be contrued as legal or professional advice. For more information, please read my full disclaimer.