Being a Guarantor – What you need to know
When renting a private property or a room in a house, the potential tenant may be required to provide a guarantor. This is the person who is legally accountable for the rent if the tenant does not pay, as well as any damage that occurs during the tenancy.
In this post, we’re going to take a look at why landlords request guarantors and what you should think about if you’re requested to be one.
What Is a Guarantor and What Is Their Responsibility?
A guarantor is typically a parent, relative, or close friend who is willing to guarantee to the landlord that the tenancy arrangement would be followed through on.
They assume financial responsibility for the tenant’s rent and other obligations, such as paying for any damage to the property. They serve as a safety net, assuring the landlord that they will receive the money owed even if the tenant is unable to do so.
When Might You Need a Guarantor?
A landlord may want a guarantor in a number of situations. It could be as a result of:
- If you are a Student: Since you are a student, you probably won’t have much or any income from a normal job and will have to rely on student loans. It’s likely that the parents will co-sign this loan.
- If you are young: If you haven’t borrowed much or anything at all in the past and have only had a bank account for a short time, your credit score won’t be as good.
- If you moved to the UK not long ago: If you want to have a credit score, you need to have lived in the UK for a while and had a bank account for at least three to six months.
- If you are unemployed or have low income: You don’t make much money or are unemployed. If you don’t make much money or get Universal Credit, you may need a guarantor in case you run into money problems.
- If you are first time renting: You might be asked for a guarantor if you can’t give a reference from a previous owner. But if you make a lot of money, you might not need one.
What Do I Need to Be a Guarantor?
If a rental agreement needs a guarantor, the guarantor, the tenant, and the landlord will all need to fill out and sign a different form called a Guarantee Application.
The guarantee part isn’t always part of the rental deal; most of the time, it’s a separate document.
The Guarantee Document outlines the guarantor’s relationship with the tenant, including whether they are only responsible for rent or for any other costs. It will also list the dates of the lease and the amount of rent that is due.
Further checks if you agree to be a guarantor:
- Evidence of being a UK citizen
- A homeowner in the United Kingdom
- Between the ages of 25 and 70
- Working full-time
- Other criteria for affordability
It is important to keep in mind that the tenancy will not begin until the guarantor has signed and accepted their guarantor application.
When can you Stop being a Guarantor?
When the tenancy ends, the guarantor’s responsibility ends. If the tenant’s contract does not include an end date, it will be when:
- The renter gives notice and sets the end date.
- The landlord and tenant must reach an agreement on an end date.
- If there is a court order for repossession.
- Tenant’s death
Is it necessary for the guarantor to live in the UK?
Yes, landlords and agents usually require a guarantee to live in the UK so that a credit check can be performed because each country has its own checks and systems that cannot be shared.
If you are an international student and cannot obtain a guarantor, you may be expected to pay a portion or all of your rent in advance.
What Are Some of the Risks of Being a Guarantor?
It is a tremendous responsibility to act as a guarantor for someone. To realise how big of a risk you are taking, you should have a good personal relationship with the tenant and a thorough understanding of their financial circumstances. Guarantors are typically the tenant’s parents or close family members.
It is very important that a guarantor thoroughly reads the contract and understands if the tenancy is an individual tenancy, in which they are solely liable for that person’s rent, or a joint tenancy, in which one guarantor may be responsible for other tenants in the house not paying their rent.
As a guarantor, you’ll want to make sure your own finances are strong and steady in case the landlord or court needs to come after you for the money.
If guarantors are unsure about what part of the agreement they are signing, they should speak with the letting agent or get independent legal advice.
With Western Lettings Glasgow, you’ll be in good hands
Signing a tenancy agreement is a big commitment, whether you’re the landlord, the tenant, or a guarantor. That’s why, at Western Lettings Glasgow, we check to see if the rent is reasonable and fits the tenant’s budget. This helps to lower some of the risks. We have found that if the letting agent does a good job of managing the house, we rarely have to ask the guarantor to pay rent arrears.
Conclusion
It’s a big responsibility to agree to be a guarantor for someone, whether it’s for a guarantor Loan, a mortgage, or some other kind of financial deal. When you agree to be a guarantor, you promise the lender that you will pay back the debt if the borrower can’t. Before agreeing to play this part, you should make sure that you can afford it and that the borrower has the ability to make timely repayments.
When you agree to be a guarantor, it’s important to know that your credit history and finances will also be at risk. If the borrower doesn’t make payments or defaults, it can hurt your credit records and make it harder for you to get loans or credit in the future.
Before deciding to be a guarantor, read the terms of the guarantee document carefully. By being a guarantor for someone, you can show your support and help them get the money they need, but it’s important to know what the risks are. It’s also important to keep the lines of communication open with the borrower so that everyone knows what their duties are and how important it is to pay back the loan on time. For the most part, agreeing to be a guarantor should only be done after giving it a lot of thought and promising to keep your credit score and the borrower’s credit score high.
Contact Us
Are you considering becoming a guarantor for a tenant? Before you take that important step, it’s crucial to understand your responsibilities and the potential risks involved. Your financial stability and credit history could be at stake.
We at Western Lettings Glasgow are committed to ensuring that all parties involved in our rental agreements are well-informed and make informed decisions. We encourage you to reach out to us at 0141 357 0436 to discuss any questions or concerns you may have about being a Guarantor. Our experienced team is here to provide you with the guidance and information you need to make the right choice.
Don’t hesitate to contact us. Your financial future and peace of mind matter to us, and we’re here to help you every step of the way.
