Letting agents might request that a prospective tenant needs a guarantor when applying to rent a property. Here a bit more info on why and what a guarantor is.
When is a guarantor needed?
Tenants might be asked to provide a guarantor to be named on a lease lease if;
- the tenant doesn’t satisfy affordability criteria
- Doesn’t have the required 3 years’ credit history in the UK to enable a credit check
- If the credit check of a prospective tenant’s credit history flags up any issues
The guarantor effectively ‘guarantees’, and takes financial responsibility for, all conditions of the lease should the tenant fail to meet them.
Affordability criteria for tenants
Usually, a prospective tenant must earn a gross monthly salary of more than 2.5-times the rent to meet the affordability criteria for a property. For prospective tenants who do not meet this condition, such as students or tenants on low incomes, a guarantor is required to share the financial responsibility for the tenancy. As such a high percentage of Edinburgh’s population are students, guarantors are common on leases in Edinburgh.
Who can act as guarantor?
A guarantor is usually a UK-based relative or close friend who is willing and able to share the financial responsibility of the tenancy. Guarantors usually will have no part to play in the tenancy but would be called in should any issues arise during the tenancy. Anyone who satisfies the affordability and credit check criteria can act as a guarantor however they need to understand that they are responsible for payment of rent and covering any financial damage or loss in the property, if the tenant fails to do so.
Affordability criteria for a guarantor
A guarantor must earn a monthly gross salary 3-times the monthly rent amount. A credit check on the guarantor must also be passed for which the guarantor must have 3 years of acceptable credit history in the UK. Guarantors will also be asked to provide proof of income & a copy of photo ID.
Liability of the guarantor
A guarantor is jointly and severally responsible for all terms on the lease along with any other tenants and guarantors. This means; if one tenant doesn’t pay their rent then the guarantor of another tenant is liable to pay the rent (we would always pursue the non-paying tenant’s guarantor first!). All names on the lease are equally liable for the payment of rent and any financial damage/loss – so, tenants should consider who they choose to share with. Tenants and guarantors are also jointly and severally liable for any dilapidations at the end of the tenancy and so if one tenant causes damage and refuses to pay to cover the cost then it falls on the rest of the tenants and guarantors to cover the amount.
Provided the tenancy runs smoothly, the property is cared for, the rent is paid on time and there are no excessive dilapidations at the end of the tenancy, then there’s no need for a letting agent to contact a guarantor once they’ve signed the lease.