Unsure about being a guarantor

[Dave20]

So DWs niece is 18 and has a baby girl. She lives with her mum, DWs sister.
Now she’s a single mother and doesn’t want to be on the council list, as she thinks it’ll take too long.
She can rent privately, but needs a guarantor. You must earn a certain wage and be a home owner, which we are.
Now DW is all up for doing this because she trusts she will pay her rent and wants to help.
I have my reservations. Firstly, she’s only 18, never had a job, never paid a bill and a bit naive like young people can be.I think she’s too excited about the prospect of having a nice little flat, and is impatient to be on the council list.
DW is adamant that her niece will always pay her rent and is sensible enough to not go down the road of not paying.

However, even if she has every intention of paying, what if she can’t pay? DW just said, well in that case, we’d be notified that’s she’s fell behind on her payments and we would have to come to an arrangement. Her mum, DWs sister said she would pay the costs. DWs sister isn’t a home owner and doesn’t earn enough, she can’t be a guarantor herself.
But is it really risky being a guarantor? We have a mortgage and 3 children, we remortgage ever 2-5 years. Will this effect our applications? We have a long time on our mortgage.
What if her rent goes up? Does her benefits pay for this? I have no idea how benefits work personally.
I can’t really stop DW being a guarantor if she wants to, but we’re linked obviously financially.
Would a guarantor be linked financially to the person? Does it affect mortgage and credit applications? Is it for the duration of a tenancy?
Is it too risky?

Another stalling/illustration tactic would be to say 'well I'd need to see her budget before agreeing' to make sure she can afford rent and essentials at least.

Will her benefits cover rent, bills, food, nappies etc? If she's looking at private renting, it's likely that a deposit will be required. Who's going to pay that? What about furniture and other costs of setting up a home, such as appliances? It can sometimes take a few weeks for benefits to come through. Who's going to pay her costs until then, plus the cost of a washing machine, cooker etc? Does she have any savings?

What's the niece like with finances in general? Is she sensible and frugal or does she spend money on little luxuries like phone contracts and eating out that many people see as essential but aren't really affordable on a low income?

I would never do this for anyone but my own children. Even then I'd need to see a solid history of money management and know I could pay the rent if I needed to for 3 months.

Charity begins at home, and your responsibility is to your immediate family.

As PP have said, get her to write down her income and outgoings for this new pad, and add on the deposit she will need and a fund for furnishings and see what it looks like.

I’m pretty sure the end result will show a massive deficit and you won’t even need to justify not being a guarantor.

Maybe speak to a solicitor as to how you can ensure it is only the DW who is responsible.
Could it affect remortgaging?
What are DN's long term plans. Why can't she live with her DM initially?

Worst case scenario - a useless cocklodging boyfriend moves in (free accomm).

Do not even contemplate doing this. You will get badly burned.

Your DN likes the idea of her own privately rented flat, her own money, her and her baby (and her partner?). But in reality, 18 year olds with no job do not have that. Why does your DW think her niece should? At your expense?

What if she falls pregnant again soon after....would she ask for a bigger rented property? I know someone this happened too but she was in a council flat.

Don't do it. I was guarantor for my student daughter when she shared a rented flat with a so called friend. They were jointly and severally liable for any defaults. The so called friend missed several payments and dropped out of her course and buggered off with her boyfriend. Her mother had signed as a guarantor but had no money or property so couldn't pay. Poor woman was working all hours to make ends meet. So the letting agents came after my daughter, hounding her daily and I ended up paying the deficit and the rent until the end of the letting period. I was working but it left a sizeable hole in my own finances for 7 months. I had previously stood as guarantor for my other children when they were students so didn't think twice about doing the same for my daughter.

DO NOT DO IT, I am a guarantor for a friends son and it's come back to bite me real hard. There is no way off getting out of the contract and at the moment I owe the landlord over 6.5k, god knows how much it'll be once he's evicted

This sounds like the worst idea ever. I know your wife is coming from a place of love when she says she wants to help her niece but risking her own family home and finances is not the way to do it.

Ultimately, the niece has chosen to have a baby at 18 and she has chosen not to go on the waiting list for a council property, neither of which is your problem. If the niece’s mother wishes to help her, she could write a letter saying she is evicting her daughter from her home and that way the council will have to bump her further up the list.

If your wife wants to help your niece, perhaps she could give her a couple of hundred quids worth of supermarket vouchers so that she can stock up her cupboards with food when she does eventually move into her own place? Or buy her a washing machine/fridge freezer, something like that? At least that way, your wife can still feel like she’s helped her niece start her journey in life but it’s with a tangible fixed cost object rather than an open-ended guarantor agreement that could go pear-shaped and cost you thousands.

If she is unemployed at the moment and fully reliant on benefits from a stability point of view it's actually easier. A lot of people I know who end up having problems is when the child hits 3 and they have to start returning to work and they end up on crappy wages and childcare costs and UC who aren't the best at paying correctly or promptly.

The best will in the world when people on benefits end up starting to have major issues is often through no fault of their own and even if she 100% is reliable and sensible, you can't predict that.

If you can't afford the rent then don't do it. It is too big a risk.

I think the whole guarantor business is iffy anyway, so many people agree with no real understanding of the implications

What ariawa said.

Tbh right now your niece and her baby are securely housed with your SIL. It's not a kindness to them to send them out into the private rental market.

I would potentially do this for my own son, precisely because he would never ask me - he's pretty hard headed and saves. But even if he did come to me this year and say my girlfriend is pregnant, will you be a guarantor so we can live together, I'd like to see them earning and saving the rental costs for a couple of years before I'd think about it.

My husband refused to let me give my dad regular money for something and it was the start of me finally being free of his financial shenanigans. I'm sorry you're going to have to be 'the bad guy' here but you're actually not, at all. It would be damaging to your niece to do this.

No I wouldn't do it. If, and only 'if' you can easily afford to pay the rent, I'd be open for a discussion in 18 months time when she's been employed for that period, saved up a bit of money and she's got her head around motherhood.

Another don’t do it (been there sadly). You need to work out to total liability you are at risk for. This includes: rent, not for the initial term of the contract but for until DN leaves the property, including time taken to evict which in pandemic could be over 12 months; any unpaid bills DN was liable for (this is actually written into the guarantors contract), so all DN utilities; costs taken to evict (unlimited). Also consider that you have no way of removing yourself as guarantor (personal experience). It’s not a 6 month liability, it’s indefinite. Contract moves to a rolling 6 months and you’re still liable. Rent increases via a contract variation rather than a new contract and you’re still liable. DN has another child in two years time and your still liable until she chooses to leave, hopefully having paid all bills. You lose your job and have 6 months when you rely on DW income, you’re still liable. If DN is struggling and wants a council house, CAB is likely to tell her to wait until she’s evicted. You’re then liable for however long that process takes. If you’ve got at least £10k in savings that you could use if needed then yes go for it. If you haven’t then no

Just in case I haven’t made it clear, once you sign that contract, there is NOTHING you can do to remove yourself from it, regardless of any change in circumstances. You’re entirely reliant on your niece and her landlord.

@soapboxqueen

If your DW wants to help she can gift her some money but being a guarantor is very, very risky.

If you can't afford to pay the rent if she defaults, how does your DW expect to pay it? She needs to understand that the LL wants a guarantor because your dn is at a significant risk of defaulting. They didn't pick her name out of a hat. It's happening for a reason.

I know pp have mentioned 'can't pay, we'll take it away' but there was one episode I'll never forget. Mum and dad acted as guarantor for their eldest daughter for a flat. Daughter had a job but hadn't been paying the rent so the balliffs turned up at the parent's door. They owed thousands. The dad was beside himself because he couldn't afford to pay it and the mum just sat in a chair sobbing.

They just didn't have the money.

They tried and tried to get hold of the daughter because they didn't even know she was in arrears (she'd bought a new car and was going on holiday). Eventually she answered the phone and just told them it was their problem.

Which it was because they'd agreed to cover the rent and everything else.

Also, I'm not sure what happens if she defaults but chooses to stay in the flat. Will the LL kick her out or if he's getting paid by you, will the contract just stay in place until she decides otherwise? With you still paying.

This is EXACTLY what cohld happen to you!!

She needs a guarantor as SHE IS LIKELY TO DEFAULT!!

This is ehy young people/bad crédit /no credit histories often need guarantors.

Many years ago, a colleague was talked into acting as a guarantor to another (useless credit rating /young) colleague, to buy a large motorbike... Colleague crashed it within the month... And told her as he no longer had it, she had to pay 🙄. She ended up losing her flat as she couldn't pay...

If you haven't got a barge pole, feel free to borrow mine.

18, single parent, on the housing list, never worked, not in education. (that is not being judgmental, I'm looking at it on the basis of risk only)

Maybe benefits will cover it all, maybe they won't. Maybe she'll pay them all over to the landlord, all good. If she doesn't, it's now your problem. She moves in a problem partner etc etc etc.

Are you prepared to make that gamble?

Are you prepared to take a family member to court to recover the rent should you be called for it?

She's be far better off waiting for the council.

Friend guaranteed their own child's rent in shared house at university. 1 (of maybe 5) tenants left owing rent And there was damage done, apparently when child wasn't there. Didn't matter, of course, friend was easiest of guarantors to go after, so LL came after them for ALL of it. Think on that - you could be liable for damage caused by someone brought back from the pub by someone you've never met. And the liability will roll on.
We helped DC by supplying six month's rent rather than guarantor-ing. It does open up a lot of rental options. Perhaps neice could be helped a bit with that? Or, as others have said, LA often help with deposits, and can offer more to get someone off the list (which she needs to be on).

I wouldn't and have refused . We rent a flat out and an aunt had to pay thousands because her nephew ran off without paying rent for months !

Don't do it!

I've watched too many episodes of "Can't Pay We'll Take It Away"!

Lots of family members default on their rent. You know nothing about it until the bailiffs turn up at your house to remove your goods!

I wouldn’t stand guarantor for anyone apart from my DC, money and family don’t mix.

Also it doesnt matter if you lose your job/cant pay... The lanlord can still come after you for SIX years after the default.

www.advicenow.org.uk/know-hows/information-guarantors#:~:text=If%20this%20is%20the%20case,date%20they%20break%20their%20promise.

Can your niece not wait a few months until her own mum has finished teacher training and has a job so can act as guarantor herself- September I imagine?
She can use the intervening time to save and prepare for independent life.

@Dave20

If she defaulted, we couldn’t pay her rent! We don’t have £750 per month spare to pay! I doubt many would. DW is convinced she’s sensible and will pay and wouldn’t put us in that position.

You have your answer. This is literally the point of a guarantor: to guarantee the rent for duration of rental contract. Your home is an asset and could be pursued to settle the debt.

Unless you can pay £750 pm on top of your current outgoings you can’t afford it.

Ultimately your DN chose to bring a baby into the world with no visible means to support it and now doesn’t fancy waiting in line for the state to fund her life system choice so wants you to do it for her… personally I wouldn’t sign up for that.

Your DW is mad to consider it

Good god, no.

Don’t do it. Your wife sounds desperately naive.