Guarantors for tenancy agreements

A guarantor agrees to pay a tenant's rent if they don't pay it.

If a tenant does not meet their financial obligations, the guarantor can be pursued for payment. This action may be in addition to or instead of pursuing the tenant.

A landlord may require a guarantor before letting a property, particularly if the prospective tenants are:

• students or other young people

• people with County Court judgments or defaults on their credit file

• housing benefit or universal credit claimants, particularly where there is a shortfall between the benefit entitlement and the contractual rent

There are no rules about who may be a guarantor. In practice, prospective guarantors are more likely to be accepted if they:

• have a good income

• have a good credit rating without defaults or County Court judgments

• are a homeowner

• live in the UK

The guarantor is likely to be a close friend or relative of the tenant.

A local authority housing or social services department may act as a guarantor for someone they have a duty or a power to accommodate.[1]

Guarantee agreements provided for money may constitute insurance, which is an FCA regulated activity.

Prior to agreeing, potential guarantors should consider the possible extent of their liability in case it covers:

• other tenants in a shared house

• damage to the property

• variations to the tenancy

• tenancies beyond the initial term

The guarantor has no right to end the tenancy, so they should consider an agreement that is limited to an initial fixed term.

Guarantors should be given a copy of the tenancy agreement, which can be checked for rent review clauses.

It may be possible to negotiate a payment of rent in advance instead of a guarantee. The guarantor could agree to be liable for a proportion of the rent if it relates to a joint tenancy.