Parent/guardian guide to acting as a guarantor
If your son, daughter or anyone asks you to be a guarantor it is very handy to know what you are signing up for and what you can expect when acting as guarantor. Therefore, below we have put together a handy guide which hopefully clears up any questions (or fears) that you may have.
What is a guarantor?
A guarantor is a third party, such as a parent or close relative, who agrees to cover the rent payment for the individual that they are guaranteeing. Landlords can ultimately take legal action to recover any unpaid rent from a guarantor. Landlords may want to check that a guarantor is able to pay the rent in the same way that we ensure a tenant’s ability to pay. For example, landlord’s way wish to carry out a credit check or assess the affordability of the guarantor.
There is a legal requirement for a guarantee agreement to be in writing. The agreement sets out the guarantor's legal obligations.
Why do I need a guarantor?
As a student you will require a guarantor as you do not have a fixed monthly income to cover the rent payments each month. If you do not have a UK guarantor, we can explore other options with you on a case by case basis.
How do I find a guarantor?
In most cases, students use a family member to be their guarantor. Often this is their mum or dad but can be extended family members or close family friends. Whoever you ask to be your guarantor must agree to do so by signing a legal document. A guarantor must be based in the UK and earning over £18,000 per annum.
Why does a guarantor need to be UK based?
Landlords will usually want a guarantor who lives in the UK, as it's easier for them to take legal action against a UK resident if they need to.
What documents fo you require from myself to act as a guarantor?
In order for our lettings administrator to assess your suitability to act as a guarantor, we will require a proof of ID (copy of passport or drivers license), proof of address (dated within the last 3 months e.g. utility bill) and proof of income over £18,000.
We have a number of options for proof of income:
If your Guarantor is employed by a company, please provide ONE of the following:
- Employers letter showing annual wage
- Most recent P60
- Copies of the last 3 consecutive payslips
- Copies of the last 3 consecutive bank statements
If your Guarantor is self-employed, please provide either of the following:
- A letter from the company accountant stating income in the last 2 years
- The last consecutive 6 months’ bank statements
As a guarantor, will I be guaranteeing any other tenants rent?
When acting as guarantor, you will only guarantee the rent for the individual tenant named on the guarantor application form and the same will apply to the other tenants and their guarantor. For the length of the contract, the named tenant will remain "Jointly & Severally Liable" (not applicable to house-share properties) as they are taking the house as one. However, this does NOT affect your guarantee on only the named tenant’s rent.
What If one of the other housemates defaults on their rent?
We would not go to the guarantors of the other tenants as each guarantor will only guarantee one tenant. If one of the house-mates were to default on the rent there are several options the landlord may take including notifying the tenant that rent is due within the 7 days and failing this we will go to the guarantor of the tenant. The guarantor is then legally responsible to pay the rent as per the deed forthcoming. If for whatever reason the demand for rent was not addressed the landlord could take the guarantor to court for damages, or/also deduct the rent from the tenants’ bond.
As a guarantor, am I only liable for unpaid rent?
It depends on what the agreement says. In many cases, a guarantee agreement also extends to other conditions under the tenancy, for example, any damage caused to the property. If an agreement does extend to other conditions of the tenancy, then it's best that the guarantor checks the tenancy agreement. This way they can see exactly what obligations they are guaranteeing.
When does my liability as guarantor end?
This depends on what the guarantee agreement says and/or what is agreed verbally. Many guarantee agreements are open-ended and will refer to liability ‘under this tenancy/agreement’. This means that liability could extend beyond the fixed term, to any extension, as well as to certain variations such as rent increases. If this is the case, the guarantor’s liability may continue for as long as the tenancy exists and will only end if the tenancy is legally ended by:
- Service of a valid notice to quit by the tenant, or
- By mutual surrender of the tenancy between the landlord and tenant, or
- A possession order from the court.
It may be possible to argue that an open-ended guarantor agreement is not enforceable, but a court would have to decide this.
What happens If I do not want to provide my financial information?
If you do not meet the affordability criteria or you do not wish to provide your financial information, the Landlord may accept one of the following options:
- To pay rent 6 months in advance
- To pay total rent in advance for the term of the tenancy
We deal with each case on a case by case basis and provide you with as many alternatives as possible.
Will sales and lettings angels be managing my son/daughters property?
Sales and Lettings Angels market a number of properties and we are instructed on these as either ‘let only’ or ‘managed’. This should not be a worry to you as the only difference is who you will be communicating with once the tenancy is underway. If a property is ‘Managed’ all communication with the agency whilst if the property is ‘Let Only’ all communication will be with the landlord directly. These details can be found on the front page of the tenancy agreement that the tenants are issued.
Who is the deposit secured with?
When tenants pay a deposit, legally it must be protected within one of the 3 government schemes: My Deposits, DPS or TDS. All properties that are managed by Lettings Angels use the DPS (Deposit Protection Service) to protect all deposits. More information can be found here: https://www.depositprotection.com/
Will the tenant who I am guaranteeing have to pay council tax?
If the tenant you are guaranteeing is a student, they do not have to pay council tax as they are exempt on the condition they live in a student only house. They will have to inform the council to confirm their exemptions. If the tenant is a professional and employed, they are liable to pay council tax and updated bands can be found here. If the council tax is included in the rental price then this is something the agency/landlord arranges.
Who will be responsible for paying the bills?
The tenants are responsible for paying all bills, if they are excluded from the rental price. This includes all utilities (gas, water and electricity), internet and TV license. They will be need to set up accounts from the start date of their tenancy and not the day that they move in. We also work with a 3rdparty company who can include all bills for a fixed cost and more information can be found here ( link to bills page)
What happens If the person I am guaranteeing needs to leave their tenancy early?
We totally understand that sometimes life changes and the person that you are guaranteeing may leave their tenancy early. However, it must be remembered that a tenancy agreement is a legal agreement and they are liable for their share of the rent for the length of that agreement or until a replacement is found. We can release tenants once a new tenant has been found and referenced and a new agreement is in place. Tenants can either find a new tenant themselves or we can advertise the room/property for a fee.
Why does summer rent need to be paid?
Almost all of our student tenancies begin on 1stJuly and end on 30thJune each year, providing students with a 12-month contract covering their academic year. When students take a property, they are informed of the summer rental terms and this is most commonly half or three quarter rent payments. This means that students get a discount for the months of July and August when they are not living in the property. If tenants wish to live in the property over these months then full rent will be due, however during this half or three quarter rent period we are happy for tenants to drop their belongings off.