Horrified at how many parents guarantee rental agreements without reading

[PinkDino33]

This might sound brutal but I am regularly horrified on Mumsnet when I read posts from parents desperately seeking advice because things have gone terribly wrong with the property their child has rented, and they are shocked to discover the full extent of what they and their child are liable for.

Their DS has just found out their flatmate hasn't paid a single month of rent in the 12 months they've lived there.. Does he really have to pay what the other boy owes?

The DD's flatmate is making life hell and her and all the other flatmates want to move out and stop paying... surely this is allowed?

The DS signed up to a house with his friends but now he wants to move back home.. Does he really have to honour this contract and pay the rent for a whole year?!

It's like parents don't really think of a tenancy agreement / guaranteeing a tenancy as being a real contract, and don't know anything about what they've signed.

Is it a joint tenancy agreement? "No idea"
Can you give notice or is it for a fixed period like 12 months? "Don't know"
"I'm going to have a proper read of the contract tonight.."

It's no good properly reading it 6 months after you've signed it!

People seem to think the contract / how it works with the Landlord must be based on fairness.. It's not fair that their child is financially liable because another tenant hasn't paid, so the landlord can't possibly have the right to try and get the money from him. It can't possibly be the case that they've guaranteed the full rent amount and not just their child's - because that would be madness!

Say it's a 6 person property on a 12 month joint agreement with each person paying £750pm.. that's a total rent of £54,000 that you are guaranteeing!!

I say this, not to shame parents but because if there was more awareness of what parents are actually signing this would cease to be the norm amongst estate agents and landlords. You've got tens of thousands of parents every year signing up to these things which no one in their right mind would sign if they actually read and understood the thing!

It's horrible when these things go wrong and you're living with someone who's a nightmare or doesn't pay, so I do sympathise. But if your child is signing up to a tenancy agreement (especially if its a joint agreement and you need to guarantee it!) ask questions, READ the contract, look up terms like 'joint tenancy' online, ask for proper legal advice if you don't understand anything.

Quite often it is a condition of the mortgage.

Certainly for smaller properties like 4 beds you have a choice of a standard BTL mortgage which insists on joint ASTs or a specialist HMO mortgage allowing individual tenancies but at double the rate.

I totally agree that students signing up so early for the next year is ridiculous, but there are a combination of factors contributing to it and rarely does the university have anything to do with it.

Letting season in our city used to be at the end of January. Over the past 10 years I've been getting enquiries from students looking for houses earlier and earlier, the first this year was in October. This is driven by two main factors - some landlords like to think they are being clever by getting ahead of the game and students who ended up with a crap property the previous year being determined to get a good one this year.

The uni has tried and tried to dissuade people from signing up early, with campaigns etc and nothing has worked. Last year they gave in and moved their housing fair from January to early December as no students were turning up because they has already found houses.

It's a crap situation for students and landlords alike. The pressure on the students is horrendous and as a landlord I don't want a group who've only known each other for 3 weeks. I would much rather they had the time to form a stable group.

There is a proposal in the incoming rental legislation that landlords being able to serve notice on student tenants to reclaim properties for the following academic year will be contingent upon tenancy agreements being signed no more than 6 months before commencement of the contract. If this works out I would be all in favour.

The narrative that it's always the mean nasty landlord imposing things on the poor defenceless tenant is something that I find happens often on here.

Bully for you.

It doesn't make business sense to let to someone who can't afford it. It's irresponsible. Would you let somewhere that costs £3k per month to someone who's income is £18k pa?

I would have less concerns / issues about joint tenancies if there weren't guarantors.

I'm not sure I understand this. So you'd be happy for your DC to be liable for a full rent of a 6 bed property, but not you?

Are you a LL? Is that what this is all about?

If people buy 4-6 bed places to rent out (knowing their main market is students) then surely you have to accept the risk that comes with that potential income is that you're renting to people on very low incomes.

I think the renters reform bill will limit tenancies being signed to six months in advance which seems sensible.

Not so much in favour of the limiting of upfront rent payments in the bill.

I think if you removed guarantors as well then lots of people wouldn't be able to rent anymore.

Not if there is the possibility to minimise that risk.. like most businesses e.g. banks, if you can find lower risk customers, you try to sign them up.

If you can only find higher risk customers, you are less likely to stay in that line of business.

ETA I am not a landlord, but my job includes assessing financial risk

Haha.

It's about risk.

It's also irresponsible to sign people up to something you know they can't afford. Why would you and your partner do this as a landlord?

Where did I say the tenants couldn't afford the property we rent? You've completely made that up / imagined it.

All I said was we didn't ask for guarantors. The tenants can more than amply afford the property on their income. We did ask details / seek proof regarding that. If their circumstances were to change (i.e. lose a job and be unable to find another) it would be bad luck for us and for them but the risk in our circumstances is low.

Really? So you think a landlord should lose 50% of the agreed rent because Flossy and Carole have had a big bust up with Lucy and Jake over the washing up?

When adults choose who they live with and rent a house jointly then there's joint liability. If you don't want that, then rent a room in a shared house.

So you rented to someone whose income (you mention job in relation to income so potentially not student loan only based... But that made change in your next iteration) could cover the rent they signed up to on your contract and so therefore didn't ask for a guarantor. You made yourself out to be really noble (look at me! I'm a brilliant landlord and don't ask for a guarantor...) when in fact, sounds like you take people who can cover their contractual commitments without the need for a guarantor....

That's quite different to renting to a group whose combined income doesnt cover the rental on the property...(Or barely covers it...) thus the need for a guarantor / guarantors to cover the commitment.

Not sure why you are finding this so difficult to grasp.

It's risk.

What is your problem?

It's not about being noble but I'd be a hypocrite if I said I disagree with the concept of guarantors (for any rental property: student or otherwise) and then we were asking for one for the property we rent. I mentioned it because I assumed you were coming from the POV of a landlord and felt I couldn't consider that side.

I think people should read and make sure they understand rental agreements and guarantor agreements. That was the point of this thread.

I disagree with the requirement for guarantors (whether student rentals or other rentals).

That's it. I'm entitled to my opinion. You can disagree if you want.

I didn't say that at all. I just don't think it's reasonable, as in this case, for someone to be brought forward by the EA to rent a room who had no relationship with the other tenants, it seems unfair that they are all on the hook for her rent.
IMHO landlords renting to students should do rent a room

Students can’t afford rent so they
need guarantors, how else is a landlord to be protected? However, I don’t agree with one guarantor guaranteeing any occupant other than the one they’re responsible for.

Most lenders require ASTs.

They should read it but how much opportunity is there really to challenge it, for most people?

I am a lawyer and read DD1's tenancy agreement for her and advised her to ask several questions, which were resolved. I wasn't required to be a guarantor. It's more of a tenant's market where DD1 is, but in some places it would be a case of signing it and shutting up or lose the place.

@PinkDino33 but the checks you/DP do on your tenants to ensure they have good incomes serve exactly the same risk reduction purpose as a guarantor does for a student with little to no income.

Of course you run the risk of your tenants losing jobs etc, just as student landlords run the risk of one or more of the guarantors refusing to pay if there is a rent default.

And I know you started the thread on the topic of not reading contracts, but you have engaged and expanded on other points, so posters will respond to you and to each other on such points. It doesn’t mean anyone has a problem with you.

I feel like recent posts have got very focused on students and the need for guarantors because of student grants not covering rent.

My original post didn't make reference to this being exclusively a student problem as I've personally found requesting guarantors has become the norm for all rentals and is an issue parents and young people continue to navigate long after they've left Uni. I have friends in their mid-30s on £60k+ still being asked for guarantors simply because they need to rent, which seems mad.

I still don't think guarantors are the answer for student rentals either. It excludes working class young people, young people without parental support, and young people from abroad amongst others. No one is going to change my mind about that.

I think what people are getting at is that there's a broader issue in that rents have increased so much more than student loans have, so landlords have a complete expectation that it's the parents who are ultimately paying the rent in reality. I'd say that's a separate issue to what I started on here, and just illustrates the need for student grants / loans to keep up with rising rents and costs tbh.

I have friends in their mid-30s on £60k+ still being asked for guarantors simply because they need to rent, which seems mad.

I agree on this.

I think it is (in part but not in full) because it is harder as a landlord to evict tenants (for very understandable reasons) so getting the lowest risk tenants is becoming even more of an priority.

My son has a house lined up for second year. We are only guaranteeing his portion of the rent. I thought that must be standard! We did check because we are guarantors for our other son as well but he lives alone. We wanted to be very sure we weren't on the hook for other people's kids rent.

But it's the same problem for your friend - the issue will be that they don't pass the affordability test, because they tend to still be based on the idea that the rent should be less than 20% of your gross income, but rents are too high for that to be realistic for many people. The ultimate problem is that rents to income is too high now.

I have sympathy with your point that it's a barrier for some groups of students, except that you seemed to suggest paying a large lump sum upfront would be a good alternative to guarantors - to me, this would advantage exactly the same people, i.e. those who with well-off parents, so I don't see how it solves the problem.

to me, this would advantage exactly the same people, i.e. those who with well-off parents, so I don't see how it solves the problem.

Good point.

Im not suggesting that paying upfront becomes the norm or would be a good alternative. That’s just one of the things I would personally consider trying in order to get a landlord to accept not having a guarantor.

I think that paying upfront would still be more achievable for working class / international young people though. Through saving up and from uni grants. Really Hard but not impossible. Vs the pretty insurmountable challenge of finding a guarantor if no one in your family is a UK Homeowner.

The guarantor isn't just tied in for 12 months, the tenants can stay on a rolling tenancy after the initial period and the guarantor is tied in until the tenants move out. I would never, ever do it.