As a member of the National Residential Landlord Association (NRLA), you understand the importance of safeguarding your investments. One of the most effective ways to protect your rental income and reduce the risks associated with letting property is by utilising a rent guarantor.  

A guarantor can provide financial security particularly when renting to preferred tenants who may not meet traditional criteria. For landlords, the right guarantor ensures that even in the event of financial difficulties, the rent will continue to be paid. 

In this comprehensive guide, we’ll cover: 

• What is a professional rent guarantor? 

• The benefits of having a professional guarantor for landlords 

• Key considerations when accepting a non-professional guarantor 

• The responsibilities of a rent guarantor 

• What happens if the guarantor fails to pay? 

• The role of professional guarantors in the Section 8 process 

• Common scenarios where a guarantor might be necessary 

• The rising demand for guarantor services amid the cost of living crisis 

• Why RentGuarantor is the trusted choice for landlords 

What is a professional Rent Guarantor?

A professional rent guarantor is a company that agrees to cover the rent and any associated costs if the tenant is unable to do so. This role was often fulfilled by a close relative or friend, but increasingly, professional guarantor services like RentGuarantor are stepping in to fill this crucial role. 

Paul Foy CEO of RentGuarantor, explains, "Our mission at RentGuarantor is to become a household name in the UK property industry, offering landlords the comfort that in a rent default scenario, they won’t be out of pocket. We work with tenants who are unable to provide a traditional guarantor, ensuring that landlords have the financial security they need." 

The benefits of having a professional guarantor

For Landlords: 

• Guaranteed income: A professional  guarantor ensures that the rent is paid even if the tenant faces financial difficulties, reducing the risk of arrears. 

• Wider tenant pool: By accepting tenants who use a professional guarantor service, landlords can consider a broader range of applicants, including students, self-employed individuals, and those with less-than-perfect credit histories. 

• Legal assurance: The RentGuarantor agreement provides a clear legal framework for recovering rent, reducing the need for lengthy and costly eviction processes. 

Paul Foy adds, "Working with over 1,000 landlords and letting agencies and a growing reputation for excellence, RentGuarantor provides landlords with the confidence that their rental income is secure, even in challenging times." 

Key considerations when accepting a non-professional guarantor

Before accepting a guarantor, it’s important to ensure that the individual or service meets specific criteria to minimise risk: 

• Financial stability: Ensure the guarantor has a stable income and sufficient financial resources to cover the tenant’s rent if necessary. Typically, this means an income of at least three times the annual rent. 

• Creditworthiness: Conduct a credit check on the guarantor to confirm their financial stability and to ensure they do not have significant debt or a history of missed payments. 

• Residency: Ideally, the guarantor should be based in the UK to simplify any potential legal proceedings. 

• Understanding of obligations: The guarantor must fully understand the legal obligations they are committing to and be willing to sign a legally binding agreement. 

The responsibilities of a rent guarantor

A guarantor’s responsibilities go beyond just paying rent. They may also be liable for: 

• Legal costs: In some cases, the guarantor might be liable for legal fees if the landlord has to take legal action to recover unpaid rent. 

• Ongoing obligations: The guarantor’s obligations typically continue throughout the tenancy, including any extensions or renewals, unless the contract specifies otherwise.  

Paul Foy adds, "The average length of tenancy in the UK is still less than 3 years. Here at RentGaurantor we believe that the responsibility of tenants providing a guarantor should be capped at 3 years.  It is reasonable in our view (and contract) that if a tenant has paid their rent for 3 years, why should they continue to have to pay for a professional guarantor or put their friends of family under ongoing commitment”. 

What happens if the guarantor fails to pay?

If a guarantor fails to meet their obligations, landlords have several options to recover the debt: 

• Court proceedings: Landlords can pursue the guarantor in court, seeking a judgment that mandates payment of the owed amounts. 

• Credit impact: Just like tenants, a guarantor’s credit rating could be affected if they fail to meet their responsibilities, leading to potential long-term financial consequences. 

The role of professional guarantors in the Section 8 process

The Section 8 process, which involves the eviction of a tenant due to rent arrears or other breaches of the tenancy agreement, can be a complex and stressful experience for landlords. Professional guarantor services like RentGuarantor play a crucial role in these situations. 

Paul Foy explains, "When a tenant falls into two months of arrears and the Section 8 process is initiated, a professional guarantor service like ours ensures that landlords are not left out of pocket. We cover future missed payments promptly and work closely with the tenant to address any underlying financial issues. This not only ensures that landlords continue to receive their rental income but also helps to avoid the disruption of evictions by offering support to the tenant." In the unfortunate situations where tenants do end up agreeing to surrendering their lease or being evicted, RentGaurantor pays the landlord the unpaid two months of rent from the initial arrears.  

Common scenarios where a guarantor might be necessary

Certain tenant profiles are more likely to require a guarantor, including: 

• Students: Without a steady income, students often need a guarantor, traditionally this has been parent or guardian, to secure a rental property. 

• Self-employed individuals: Without regular paycheques, self-employed tenants might need a guarantor to reassure landlords of their ability to pay rent. 

• Tenants with poor credit: Individuals with a history of credit issues or CCJs (County Court Judgments) might find it challenging to rent without a guarantor. 

• First-time renters: Those without a rental history, such as young professionals or recent graduates, might need a guarantor to secure their first rental property.

The rising demand for guarantor services amid the cost of living crisis

The ongoing cost of living and challenging economic environment have significantly increased the demand for guarantor services. As many tenants face financial uncertainty, securing a rental property without a guarantor has become increasingly difficult. 

This growing demand underscores the importance of partnering with a reliable guarantor service like RentGuarantor, which provides the necessary security for landlords to continue letting properties with confidence, even in uncertain times.

Why RentGuarantor is the trusted choice for landlords

RentGuarantor has established itself as the highest-rated UK rent guarantor service on Trustpilot, among companies with over 100 reviews. Our commitment to customer service, rigorous vetting processes, and dedication to landlord security have set us apart in the market. Add to that the service is completely free to Landlords.  

"We understand the concerns of landlords and have built our service around providing the utmost reliability and trust," says Paul Foy. "With a growing presence in the UK property industry, we are on our way to becoming a household name, offering landlords the peace of mind that in a rent default scenario, they will not be left out of pocket." 

Conclusion

Utilising a rent guarantor is a prudent strategy for landlords, offering vital protection against the financial risks associated with letting property. As a member of the NRLA, ensuring that your investments are secure is paramount. Whether you are dealing with students, self-employed individuals, or those with less-than-perfect credit histories, a guarantor provides the financial security needed to manage your properties with confidence. 

By taking a proactive approach and partnering with a trusted guarantor service like RentGuarantor, landlords can enjoy a smoother, more secure tenancy experience, even in these challenging economic times. 

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