Landlord Products / Services
I’m such a raging fan of Tenant Guarantors. And every landlord should be!
I’ve always considered them to be a no-brainer, so I’m surprised when I come across landlords’ that are willingly to sign tenancy agreements without one. I find it baffling.
Like, why wouldn’t you insist on your tenant having a guarantor? What’s the downside here?
I think many landlords might believe that tenant guarantors should be reserved for high-risk tenants, but I’d argue that they provide a security measure that every landlord should grab with open arms and benefit from – no matter what their tenant’s risk profile looks like.
So in this blog post, I’m going to put forward my best argument(s) for why I believe all landlords should require tenant guarantors, and I’ll also, hopefully, cover a lot of the key points and FAQs around the topic.
The information in this post applies to assured shorthold tenancies in England and Wales.
Page contents
- Quick Overview: Tenant Guarantor
- What is a Tenant Guarantor?
- Who can act as the Guarantor?
- What is a Tenant Guarantor Agreement/Contract?
- Types of guarantor agreements
- When and who signs the Guarantor Contract?
- Key points often included in a Tenant Guarantor Agreement/Contract
- Finding a suitable Guarantor / Referencing Guarantors
- How much does a Guarantor have to earn?
- Should my tenant have a Guarantor?
- Does each tenant under a joint-tenancy need their own Guarantor?
- What if my tenant falls into arrears?
Quick Overview: Tenant Guarantor
- A tenant guarantor is a third party (usually a family member or friend) who agrees to take financial responsibility for a tenant’s obligations in a rental agreement;
- their primary role is to guarantee that the tenant will meet their financial obligations, including rent payments and any damages or unpaid bills;
- landlords prefer having (and often require) tenant guarantor’s because they provides additional security, especially when tenants don’t have a strong rental history or credit rating;
- if the tenant fails to meet their obligations, the guarantor can then be held accountable and liable for any costs;
- a Tenant Guarantor Agreement is a legal binding contract that outlines the specific terms and responsibilities of the guarantor;
- the agreement may outline the circumstances under which the guarantor can be held liable, including rent arrears, damages, and other financial obligations.
What is a Tenant Guarantor?
A “guarantor” is a person that agrees to accept financial liability for a tenant in a rental agreement. The primary purpose of a tenant guarantor is to provide the landlord with additional security in case the tenant fails to meet their obligations. For example, if the tenant falls into arrears the landlord can pursue the guarantor for the money. It can also include covering damages.
Once a guarantor signs an agreement, they become legally bound to honour the agreement.
Who can act as the Guarantor?
Essentially, anyone over 18 can be eligible to be a guarantor, but they’re usually a family member or a close friend of the tenant. There are also specialist guarantor companies that provide a service for those that can’t get a guarantor (but that’s less commonly relied upon).
The landlord has the right to refuse any prospective guarantor that is unsuitable to take on the role. Obviously the guarantor needs to be in a financial position whereby they can realistically be pursued for any outstanding monies owed by the landlord, otherwise what’s the point?
To help verify whether a prospective guarantor is suitable, they should be thoroughly referenced like just like tenants.
Being a guarantor is not a task that should be taken lightly – but sadly, it far too often is. It entails taking on a lot of responsibility on behalf of someone else. Honestly, I’ve heard of so many relationships going down the shitter and seemingly becomes unrepairable after guarantors’ have been pursued to cover costs incurred by the person they’ve vouched for, it’s actually quite alarming. The reality is, most people only agree to becoming a guarantor because they don’t actually believe the tenant will default. That often doesn’t end well.
So it is imperative guarantors understands their responsibilities and the risks involved.
What is a Tenant Guarantor Agreement/Contract?
A Tenant Guarantor Agreement (also known as a Guarantor Agreement Contract) is used to create the legal binding agreement with the guarantor. The contract sets out the terms and conditions of the agreement.
The guarantor agreement is NOT a substitute for an Assured Shorthold Tenancy Agreement contract, but rather it should be used as a supplement.
Download Your Guarantor Agreement
- Only £3.99 - download once and unlimited use
- Our Guarantor Agreement was originally drafted by specialist landlord law solicitors
- Provided in .doc format so fully editable
- Written in "plain English" with easy to understand terms and conditions
- GDPR updated
Types of guarantor agreements
- Within the tenancy agreement – the terms and conditions of the guarantor are part of the original Tenancy Agreement contract). In this case, the tenant, landlord and guarantor sign the tenancy agreement.
- Deed of guarantee – this is when there is a separate agreement/contract, which sets out the terms and conditions. It’s a separate document from the tenancy agreement.
- Date – the date at which the Guarantor contract was signed
- Guarantor details – the name and contact information of the Guarantor
- Landlord details – the name and contact information of the landlord
- Tenant details – the name of the tenant or tenants for whom the guarantor is providing the guarantee
- Property – the address of the property that is being rented
- Tenancy term – the start and end date of the fixed terms of the tenancy
- Rent – how much rent is being paid
- Guarantee Terms & Conditions – the conditions under which the guarantor’s obligations will be activated, typically after the tenant has failed to meet their obligations, such as not paying rent.
- Signatures – the Guarantor’s signature. It is also recommended to get a signature from a witness.
- 1 Working Day (on average)
- Credit Check
- Linked Address, Identity & Fraud Information
- CCJs, Decrees, and other court information
- Right to Rent Check and Advice
- Bankruptcy data
- Electoral Roll check
- Alias name search
- View sample report
- 3-5 Working Days (on average)
- Rent Guarantee Insurance Eligible
- Credit Check
- Linked Address, Identity & Fraud Information
- CCJs, Decrees, and other court information
- Right to Rent Check and Advice
- Affordability Rating
- Previous Landlord Reference
- Employers Reference
- Bankruptcy data
- Electoral Roll check
- Alias name search
- View sample report
- Only £3.99 - download once and unlimited use
- Our Guarantor Agreement was originally drafted by specialist landlord law solicitors
- Provided in .doc format so fully editable
- Written in "plain English" with easy to understand terms and conditions
- GDPR updated
When and who signs the Guarantor agreement contract?
The who
In a typical guarantor agreement, it is required for the landlord and guarantor to sign the document.
Some agreements do make an allocation for a witness, but it isn’t necessary. I think it’s good to have one, though.
Two copies of the agreement should be signed, and one should be kept by the landlord and the other by the guarantor.
The when
With the rental agreement: The guarantor agreement is typically signed simultaneously with the tenancy agreement contract. This ensures that all parties involved – the tenant, landlord, and guarantor – are aware of their respective obligations and that the terms are clear from the beginning.
Before Move-In: The guarantor should ideally sign the agreement before the tenant moves into the property. This ensures that the financial responsibility of the guarantor is established from the start of the tenancy.
While it’s not that common, it is possible to include (or even amend) a guarantor in the middle of a tenancy if both tenant and landlord mutually consent. If that’s the case, then obviously signing before the move-in date doesn’t apply.
Key points often included in a Tenant Guarantor Agreement/Contract
While guarantor contracts differ from one another, they all generally contain the same core information, which is as follows:
Finding a suitable Guarantor / Referencing Guarantors
Finding a suitable guarantor is arguably as important as finding a suitable tenant. Well, almost. My point is, it’s important.
A guarantor should never compensate for an unsuitable tenant; both tenant and guarantor should be properly referenced, credit checked and ultimately deemed suitable.
You should be able to use most professional tenant referencing services to also reference guarantors.
If you’re looking for suggestions, I’m happy to recommend OpenRent’s credit check service – I’ve used them several times to qualify prospective guarantors, and they’re my go-to. Details below:
| Supplier | Notes | Price | |
|---|---|---|---|
Supplier | Notes / IncludesSpeedy Reference | Price £20 Inc VAT | More Info |
| Supplier | Notes / IncludesComprehensive Reference | Price £20 Inc VAT | More Info |
Please note, I try my best to keep the information of each service up-to-date, but you should read the T&C's from their website for the most up-to-date and accurate information.
If after referencing the guarantor is found to be unsuitable (i.e. they have poor credit rating), you may want to ask your prospective tenant to find someone else to take the position. Failing that, you may want to find another tenant that is able to find a more suitable guarantor (that’s what I would do anyways).
How much does a Guarantor have to earn?
There’s no hard and fast rule, but common sense prevails. They need to earn enough to sustain their own life and potentially your tenants.
A common consensus is that a guarantor should have an income of at least three times the annual rent and that they should earn more than the tenant. So, if the rent is £850 PCM, the guarantor is usually expected to earn at least £30,000 per annum.
Should my tenant have a Guarantor?
Guarantors aren’t required to form a legally binding tenancy, so landlords don’t “need” one per se.
Many landlords don’t insist on them, and many manage just fine. However, that’s kind of like going on holiday without travel insurance. Many do it and get away with it, but it’s not particularly sensible.
I personally make it a requirement for all my tenants, least of all because having a guarantor comes at no extra cost [for landlord or tenant] and they provide a useful and robust safety net for landlords.
It used to be the norm to only call upon a tenant guarantor when a landlord feels hesitant about renting to a certain tenant due to concerns about their ability to meet their obligations. For example, where a tenant does not meet the landlord’s standard income or credit requirements. This often includes students, young adults, or individuals with limited rental history. But nowadays, it’s common for landlords to require a guarantor in all cases.
I personally think the old ways was nonsensical – it’s a weird, if you think about it logically, innit? If a tenant is high-risk or raises any concerns (basically, unsuitable for the vacancy), then why are they being considered in the first place? A guarantor shouldn’t be used to compensate or patch holes. As mentioned already, I believe both tenant and guarantor should be verified and suitable for the given tenancy.
First and foremost, all landlords should have tenants that meet the requirements in place, because after all, they’re the ones’ that will be living in the property and expected to pay the bills. A guarantor is a backup plan that no one should want to rely on, so minimising the likelihood of needing one to step in and save the day should be a priority.
Does each tenant under a joint-tenancy need their own Guarantor?
Not necessarily, it depends.
With a married couple, it’s usually easy enough to get one guarantor to accept liability for the pair. However, if a guarantor isn’t willing to do that, I normally require each tenant to get their own guarantor (that’s quite often the case with unmarried or newly established couples).
Some guarantor agreements includes a joint and several liability position by default. This means that if there are multiple guarantors’ or just one guarantor for a tenancy, each guarantor is responsible for their proportionate share of the debt, but they are also collectively responsible for the full amount. So the landlord can choose to pursue any one of the guarantors for the entire debt or seek contributions from multiple guarantors, depending on their preferences.
In other words, a guarantor can be responsible for the arrears of every tenant under a joint tenancy, even if the guarantor has no idea who the other tenants are (this is common in a student setting).
Needless to say, it’s crucial to check the terms of the agreement.
What if my tenant falls into arrears?
In the event where the tenant falls into arrears and/or needs to repay any other outstanding debts, the liability can fall onto the guarantor. And this is precisely what guarantors were designed and created to do.
If the guarantor fails to cover the costs (and essentially breaches the terms of their guarantor agreement), then the landlord can take legal action against the guarantor.
So, in this case, landlords can pursue either tenant and/or guarantor for any owed money, but it’s usually the case that chasing the guarantor makes more financial sense, as they’re more likely to have the means to pay the debt.
Download Your Guarantor Agreement
Right, I think I’m done. I’m all tapped out.
Hopefully I’ve managed to cover a lot of the key points regarding tenant guarantors, and you’re leaving with either newfound conviction or some good ol’ positive reinforcement.
If you have any questions, or if you have any personal thoughts on the topic you’d like to share, please drop a comment below.
Landlord out xo
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
Any documents you download from this website are just examples of its kind and should be checked by a professional. I give no warranties or representations concerning the documents, and accept no liability in relation to the use of the documents.
I signed as guarantor for my daughters boyfriend as his job was new, my daughter had a reference so had her guarantee from them. They have now split up after one month!! he was abusive towards her, the landlord heard this and has kindly agreed to give them one months notice, of which i have just had to pay £400, enough time for him to find somewhere else, my daughter having to come home, however he will not sign to release me from being his guarantor as wants his rent paid!!!! what can i do, any suggestions please