Guarantors needed for growing number of tenancies – claim

Guarantors needed for growing number of tenancies – claim


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The cost of living crisis combined with a logjam in the courts means landlords are now “very unlikely” to rent properties without guarantors being in place, according to an outspoken industry figure.

Jonathan Rolande of the National Association of Property Buyers says the rental market currently remains “so hot” that any tenant not willing to provide one has “virtually no chance” of getting the keys to a property. 

He comments: “Even a few years ago a tenant unable to provide a guarantor had a pretty good chance of finding a landlord who’d rent them a place.  Now there’s virtually no chance and the rental market is still so hot that tenants who don’t have one can be overlooked.

“The Cost of living crisis means tenants are much more likely to default on rent if faced with difficult choices such as paying for food, heat or rent. Another big factor is that courts are way too slow to evict a non-paying tenant. Right now it can take at least three to six months if the tenant makes it difficult. 

“Landlords will pick up around £1,000 in legal fees and most don’t bother to pursue the tenant for the arrears.”

Rolande claims that a tenant deciding to stop paying rent often goes hand in hand with another issue, such as property damage. 

He continues: “Sometimes they don’t report issues or won’t allow access for repairs, fearing the consequences. This means small problems such as a water leak quickly become more serious, and expensive to put right.

“People also need to remember that the maximum deposit is five weeks rent. Average UK rent is £1200 so deposit is less than £1400. With sky-high labour and material costs, this goes nowhere near covering the cost of items like carpets in an average rental property, let alone other repair costs and missed rent too.

“At the moment, margins are being squeezed. When mortgage rates were low, profits were higher meaning landlords could run the risk of a non-payer without serious consequences. Today, many BTLs make no profit at all and landlords cannot risk having to prop up a mortgage with their own savings.”

Offering his advice to landlords on how best to make clear you need a guarantor he says: “ If you’re using a letting agent, stipulate that you would like a guarantor for your property. It involves extra referencing and may put off some potential tenants but most people understand the reasons behind it. If you are letting privately there will need to be checks and a formal agreement from the guarantor to cover any rent shortfalls or damage over and above the deposit. Guarantors should be financially stable and ideally own a UK property.

“An additional reassurance for a landlord is that very few people would offer to be a guarantor for a friend or family member if they had doubts about them.”

 

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