Explained: Being a Guarantor
Author: Rent Guarantor
A Tenant Guarantor, a title which mainly friends and family take on to ensure their nearest and dearest can live happily in their chosen property. However, how many individuals who take on this title actually understand the responsibility they have taken on?
What is a Guarantor?
A Guarantor is someone has agreed to vouch for a potential tenant of the property and accepts liability for a tenant if they fail to fulfil their obligations as outlined in their tenancy agreement. This could mean they will be called upon if the tenant they are acting as Guarantor for falls into rent arrears, or causes damage to the property that they can’t pay to fix.
A Guarantor will usually be asked by an Estate Agent to sign a Guarantor Form to legally confirm their position and obligations during the length of the tenancy to the Landlord. Usually Guarantors will also need to be referenced in the same manner as tenants to ensure that they are able to afford the worst-case scenario of any unpaid rent and damages.
Most Estate Agents will have their own criteria that a Guarantor needs to meet in order to be accepted. This could include earning a specific amount, being a homeowner or even being over a certain age. However, due to the fact there are also Guarantor companies such as, Rent Guarantor, that offer their services to act as a Guarantor for potential tenants in the same way a friend or family member would, some Estate Agents may be lenient and skip referencing or certain parts of their criteria in these instances. You would always need to check with an Estate Agent first if you are wishing to use a Guarantor company for your tenancy.
What to Consider Before Becoming a Guarantor?
Before anyone agrees to act as a Guarantor for a friend or family member, they should ensure that they truly understand the responsibility of what they are signing for.
The person considering being a Guarantor should ask themselves the following questions:
- The Worst-Case Scenario – Can you really afford to pay someone else debt if the situation occurs?
- Feeling Pressured - Do you feel like you say no without any negative repercussions? if the answer is no you are taking on a big responsibility for the wrong reasons.
- Trust – How strong is your relationship with the person you would be acting as Guarantor for?
If after asking yourselves these questions you still feel as though you would be comfortable to act as a Guarantor, it’s time to sit down with the potential tenant and have an open conversation about their finances.
Previously mentioned Guarantor companies, such as Rent Guarantor, require potential tenants to pass an application process before they will pre-approve a them and allow them to advise an Estate Agent/Landlord that they have a Guarantor in place.
Don’t be afraid to ask the same of your friend or family member, after all they will need to present these documents to their Landlord/Estate Agent anyway to confirm they can afford the property before they sign any contracts. You will then have a true understanding of their circumstances and know how much potential risk is involved with acting as their Guarantor.
In conclusion, agreeing to act as a Guarantor for a friend or family member is a much larger responsibility than some people think. However, if you ask yourself the questions mentioned above and ensure you have a clear picture of the income and circumstances of the person you are Guaranteeing then at least an informed choice can be made. If your friend or family member is uncomfortable discussing their finances with you, don’t feel pressured into still going along with acting as Guarantor. Always ensure that you take care of yourself first!
Disclaimer: Rent Guarantor is not qualified to give legal or financial advice. Any information shared in the above blog is an opinion based on personal experiences within the property rental sector, and should never be construed as legal or professional advice.