Landlords are entitled to ask tenants to provide a guarantor. If you are asked to be someone's guarantor, it's really important that you fully understand what this means and what you are responsible for.
What is a guarantor?
A guarantor is a person who agrees to pay any rent that the tenant owes to the landlord and to cover any financial loss that the landlord experiences as a result of the tenant's failures to stick to the terms of the tenancy agreement. Having a guarantor is, basically, an insurance policy for the landlord. A landlord who requires a guarantor a will usually insist that the person who acts as guarantor is a property owner who lives in the same country as the tenancy is located in.
What can the guarantor be held responsible for?
The guarantor is normally responsible for ensuring that the tenant's rent is paid in full and that the tenant sticks to the terms of the tenancy agreement. If the tenants cause damage to the property, the landlord can use the tenants' deposits to cover the damage. However, if the damage costs more to repair than the value of the deposits, the landlord can pursue any guarantors provided by the tenants for the remainder.
Always read the tenancy agreement before you agree to act as a guarantor for someone. You will need to fully understand the terms in this agreement as well as the terms in the guarantor agreement that you will be asked to sign. Keep a copy of both documents for your records.
Can the guarantor be expected to pay the rent of other tenants in the property?
If there is more than one tenant in the property, the guarantor could be legally responsible for rent arrears and damages owed by the other tenants as well. Most joint tenancy agreements are set up so that all tenants are jointly and severally liable for rent and damages. This will usually extend to the guarantor, and could result in the guarantor being asked to pay rent arrears owed by a person that the guarantor doesn't actually know.
You should ask that your liability be limited to the rent owed by the person that you know and limited to any damages caused by this person if you agree to act as a guarantor for someone living in a shared house. You should ensure that any contract or deed that you sign clearly states what your guarantee covers.
If you end up having to pay the debts of someone because you acted as a guarantor, you can try to reclaim your money from this person by taking them to court. If the money owed is less than £3000 you can use the small claims court to try to recover your money.
Signing a guarantor agreement
The landlord should provide the guarantor with an agreement to sign. This agreement should clearly state what the guarantor's liability is. The guarantor and the landlord will normally sign this contract. The contract will usually include the following information
- the date at which the guarantor form was signed
- the name of the guarantor
- the name of the landlord
- the name of the tenant who is being guaranteed
- the address of the property that is being rented
- how much rent is being paid
- the terms of the guarantee
- the length of the guarantee
- a list of obligations to which the guarantor agrees
It is essential that you keep a copy of this agreement once you sign it.
How long does a guarantor agreement last for?
You should check the agreement carefully to find out how long it will last for. Most people assume that the guarantee will only last for the first year of the tenancy. But this is usually incorrect. It's very common for a guarantee to last as long as the tenancy lasts. So, if the tenant remains in the property for four years, you will continue to be responsible for any arrears or damages during that entire period.
Most tenancies will run for a fixed term and will then continue on a month-by-month basis. The fixed term period is commonly one year, but could be for a different period. You could ask the landlord or agent to include a term in the guarantor agreement which allows you to end your liability after the fixed term by writing to the landlord giving him or her four weeks' advance notice of the date that you wish the guarantee to end.
If the terms of the tenancy change significantly during that term, you may be able to argue that this change has created a new tenancy and that your guarantee no longer applies. However, the success of this tactic will depend on how significant these changes have been and on what your original guarantor agreement said.
Unable to provide a guarantor
Landlords are entitled to ask for a guarantor and may not want to rent to someone who is unable to provide one. If you are having trouble finding a place to rent because you are unable to provide a guarantor, you could try negotiating with the landlord. The landlord may, for example, agree to take a larger than usual deposit instead of a guarantor. Any deposit that you pay must be protected in an approved scheme.
If your landlord is unwilling to negotiate over your inability to find a guarantor, you will probably have to find another property. It may be worth your while contacting Smartmove Housing to see if they have any properties available to rent that would suit your needs.