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 don’t do it from me.

I am amazed though, at how easy everyone seems to think it is to get yourself a council house!

It's pretty common for parents to have to guarantee their student children's rent. But that's slightly different as it's your own child, and it might well be you covering the rent or part of the rent anyway. I don't know what students whose parents don't fit the criteria do. I thought it was a little unfair really; not everyone has homeowner parents and it's a big ask for someone outside the immediate family. It's kind of discriminatory.

Don't do it. You will not have a moment's mental calm while you are doing it. The risks are far too high.

@Dave20

Ive no idea how long the term is or the rental cost- I just put £750 as an example, sorry should have said that. As I understand it, people try to private rent with housing benefit when they don’t or can’t rent with social housing. I don’t know how housing benefits work or universal credit. She’s single with a baby. I’ve no idea how much she gets in benefits. Or how much she’d get in housing benefits. Would she really have enough to live on in a flat paid for by the government? ( putting aside the guarantor part).

What she would get in housing benefits is the amount the LA charge rent on a certain type of property any extra you have to make up yourself and if renting privately there is always going to be a top up amount that your going to have to pay

I would not do this. Your niece may have good intentions but I wouldn't rely on her to pay the rent.

The landlord would persue you for any non payment.

I work as a debt counsellor and for CAB as a volunteer. I see this all the time when people are pushed to the limit financially and forced to pay as they have been a guarantor.

In my area there are over 6,000 families waiting for social housing. Your Niece may never get a council house. She may need a guarantor for a significant amount of time which would be risky for you.

We had a tenant to defaulted on their rent and also stole lots of appliances broke things that we left all in all ended up where this person’s parents was on the hook for £10,000 which they did pay but I felt bad asking them for it

If you can't cover the rent in the event she doesn't pay then you shouldn't sign a contract that guarantees you will. Evictions can be a long drawn out process so you could end up liable for several months of rent. As a homeowner, that gives the landlord reassurance that if there's no way you can pay they could as a last resort get a charge on your own property to secure the debt.

Don't do it if you can't afford to stump up the rent - which you say you can't.
DH became guarantor for a relative who similarly couldn't get parental guarantee. Rent was paid and all was fine until circumstances changed - in this case Covid. The relative needed to give up the flat and pay to get out of the contract. They didn't have the money to do this and as DH was guaranteeing the rent, ended up stumping up the cash otherwise the landlord would have come to him anyway. There were promises of repayment of the 'loan'. He's still waiting! Difference being we are fortunately not desperate for the money. You don't sound like you are in a position financially to do this - so don't do it. Your DN has a roof over her head.

@EverNapping

Don't do it.

There's nothing to make her pay her rent if she decides to spot her job, or stop paying.

Your DW could get a CCJ, that'd kill any credit/mortgage options.

It is ridiculously risky.

She doesn't have a job?

Firstly, she’s only 18, never had a job, never paid a bill

Nope don't do it

DO NOT UNDER ANY CIRCUMSTANCES DO THIS. If you are incredibly lucky it will go well. You will not be incredibly lucky. You will end up in a financial nightmare that never ends. It will destroy your credit record and ruin your relationship with most of your family. Just say NO and mean it.

A friend asked me to be one, similar situation to your wife's niece. I talked it through with a neighbour. She had been through the same and was stung very badly. Her husband ended up in court and had to pay thousands of pounds. This person just stopped paying their rent. So you've got to think if she did stop paying for whatever reason, can you afford it, to pay for the whole contracted term e.g. 12 months? It put me off doing it for my friend because I couldn't afford to do that.

Another vote for don't do it. I don't doubt that she is a nice lass as your DW seems to think highly of her but there are so many imponderables and if any of them came to pass it will cost you a lot of money and with it your credit rating.

She'll be on benefits and even if she gets housing benefit she'll have to find the top up amount herself. It will be a struggle for her when she and baby need other things.

She may also blow her money when she wants things she THINKS she/baby need. Remember - she is too impatient to go on a council housing list. She likes having stuff NOW.

If her benefits are late or hit a problem she won't be able to pay. That'll be on you even if it's not her fault.

She's very young and no experience of living away from home, budgeting, working, running a household. She may have a nice little dream of her and baby having a lovely life in their own flat but in reality she may be lonely and struggle. (I know a few people who went back home to parents after just a few weeks living away from home.) She may well miss having the heating on all day, Netflix etc. Plus mum to help with the baby when she's tired and fed up or worried. If she ups sticks and leaves after a couple of months, you'll be paying the rent until the end of the term (tenancies are rarely less than 6 months).

If she gets an unsuitable boyfriend or friends and they damage the flat or she gets evicted because of their antisocial behaviour, you will be paying for any damage plus rent to the end of the term.

That's why a landlord is insisting on a guarantor. It's not like a reference" "yes she's a very nice young lady, we can vouch for her good character".

My son's landlady acted as guarantor for her own son at uni. He defaulted without telling her and did some damage to where he was living. She's now in debt for £000s and has to take in another lodger to repay the money.

Direct your niece here:

https://www.rentguarantor.com

This is a company who will guarantee her rent - for a price.

If you can't get your wife on the same page for a significant financial decision like this you've got problems.

Can you afford to cover the rent plus cost of damages.

Also be wary these agreements can roll on so it not just going to be for a year is it?

Show your wife guarantor nightmare stories in the guardian and moneysavingexpert. What is she going to do if dn loses her job.

If you can't cover the rent in the event she doesn't pay then you shouldn't sign a contract that guarantees you will

That's it in a nutshell.

As an ex landlord I can only join all the people saying don't do it. If she didn't pay the rent, for any reason, you absolutely would be pursued to pay it instead - for the term of the rental contract. Matters get complicated if she decides not to give notice to quite the property, in spite of not personally paying any rent. The landlord is stressed, but reassured by the fact that during their struggles with the rogue tenant their rent is guaranteed to be paid... you get the picture.

The point of the guarantor is that you are assurity that the rent will be paid upon default of the tenant. If you can't afford to pay the assured sum monthly then you shouldn't be guarantor.
If you do become guarantor then you are only setting yourself up for financial grief in the future and possibly loosing your assets.
Your niece needs to learn that financially you have to stand on your own two feet. She needs to secure a job with a suitable income for her aspirations.

Not knowing anything about housing benefits or indeed, anything of the system,750£ today would probably at the moment cover just the heating! & I’m guessing she will want all the other stuff that teens almost demand these days phones, subscription to tv, going out etc etc NOT A CHANCE OF EVEN CONSIDERING THIS MOVE,,

If she defaulted, we couldn’t pay her rent! We don’t have £750 per month spare to pay!

Then the discussion is moot. You cannot afford to pay her rent or for damages so you aren't able to be a guarantor, your wife doesn't seem to understand that you're on the hook legally for paying her rent and debt arrears, why on earth would you agree or consider this further,??

Your wife is desperately naive and being very stupid to enter into legal contracts that she doesn't understand.

I realise others here have already said it a million times but no no no.

Why is this your problem? And it will be your problem, your DW only earns 10K so its you who will be the guarantor!

Don't get involved. People have great ideas when it comes to only people taking the risk!

I know she is a single mum, but is there any boyfriend on the scene?

She's only 18, why can't she live with her mum and save up for a deposit? Because its never going to happen!

There's no way she is going to be capable of making that amount of money with a baby and getting on the property ladder. You will be looking at a very long stretch as guarantor!

She's sounds very entitled! Avoid this situation like the plague! It won't end well for you.

If your dw is still not getting it show her your budget then stick another £750 on top.
If she says DN will pay say ok let's look at dn budget.
Hopefully your dw will see how absolutely batshit crazy this idea is and drop it.
Also babies are bloody expensive. What happens if babys dad stops paying maintenance? So that cant be relied income. Get the figures in black and white in front of your wife.

If your wife is going to even consider this she needs to see all DN's financial details, she needs to know how much is going in and how much the rent is going to be.

DN has already had a baby at a very young age with no real thought as to where she is going to live or how she is going to afford it. She doesn't work and I doubt she has any idea of the costs involved in rent, bills, food and bringing up a baby. I think this could be a huge shock to her, she could feel very isolated in a flat with a young baby with hardly any money and could quickly end up getting into debt. I wouldn't touch it with a barge pole for her own sake as much as yours. She is much better off living with her mum for now.

@dave20
I don’t know how housing benefits work or universal credit.
She’s single with a baby. I’ve no idea how much she gets in benefits. Or how much she’d get in housing benefits.
Use entitled to. You don't need loads of personal details and it would give you a rough idea what your DN would receive. Then look at what rents are locally. Show it to DW as to why this is A Very Bad Idea. Don't do it.

We were guarantor for our eldest. They split up, boyfriend stayed in property, refused to pay and we were left £3,000 down.

So unless you’re completely happy about being liable if she defaults, you must say no.