Can't believe no friends will act as guarantors - why do they think they have to pay?

[IWillAlwaysBeinaClubWithYouin1973]

I mean do they literally think I am going to refuse to pay my rent?

Split from H last year, my home of over 30 was sold I have the equity in the bank still because I've just pulled out of a house purchase and decided to continue renting. Found a new flat within days now I am actually scared I'm not going to get it, nor anything else to rent, unless I have a guarantor. New letting agents/landlord not accepting equity, they want a guarantor as well as 6 months in advance.

I've just stood guarantor for my youngest DD and her uni flatmate, didn't think twice. I know what's involved, I would have thought it's obvious you assume the person will pay their rent - surely you just use your judgement? But had some awkward conversations with friends - we're all professional people, but they actually they think its going to affect their credit rating, ability to get a mortgage and that it will "stretch them financially"? I work, have the equity from the house in the bank, I'm 60 bloody 2! How much of a flight risk do I appear to these friends?! So far 2 said no, 2 ghosting me, I need to provide info to the agent first thing in the morning. Going to move on further down my list but it's getting more and more tenuous. I feel a bit sick to be honest.

Do you know what a guarantor is/does or would you too think you stood a reasonable chance of losing £000s, or even that I was actually asking for money in some way? Is it something that people just don't feel comfortable to do?

The amount of funds are irrelevant these days. You can provide evidence of thousands in the bank and landlords will still want a guarantor. It’s nothing to do with the solvency or otherwise of the prospective tenant. It’s more about the issues around the eviction process and the length of time it takes. The tenant can potentially stay put for many months and pay no rent, and the landlord is stuffed without a guarantor.

@IWillAlwaysBeinaClubWithYouin1973 thanks for the update. So, since I last moved six months ago, the rental market has turned into an absolute shitshow, yet again. Lovely.

Anyway, re: renters rights/renters reform bill:

• It's currently going through the house of Lords at pace and is expected to become law around October; the last day of the House of Lords debating it is today.

• It will effectively DISSOLVE ALL TENANCIES; that's right, it doesn't matter if they force you to sign a 12 month agreement, the minute it becomes law, that term no longer exists. You can give two months notice at any point.

• To further illustrate: you can tell an agency you're looking for a 5 year rental, move in, give your notice on day 1 and leave 2 months later. Fixed term tenancies will cease to exist.

• Upfront payments of rent of more than 5 weeks will be banned. They are not currently. I suspect this is why you're experiencing this now: they know they can get away with taking 6-12 months upfront rent now, but come October, they won't be able to do that.

• Bidding wars for rentals will be banned. I've been asked 'what's the most you'd be prepared to pay for this rental?' (in 20/21) and that will become illegal. It's predicted that what will happen instead is LL's will massively overprice their rentals and future tenants will bid them down, the LL can then take the highest bidder under the over-inflated rental value. Haven't seen anything to stop this from happening yet.

They may even be forced to give back big advance rent payments - I don't know, I haven't read anyone who's covered off that particular point.

So, in your particular circumstances, give them 6 months if they want it - but, for the love of god, look up the estate agent's books on Companies House and make sure they're fully solvent and have been for many, many years, that your (normal portion) of the deposit is in a Deposit Protection Scheme, and that you get a receipt for the advance rent you pay.

The Independent Landlord is my go-to source on all things renters reform. She did an update just today.

I would do it for my best friend but she is a special case. She looked after my mum when she was sick, her children lived with us for a month when she was unwell, she lived with my family for two years ect. so she is more like my sister. None of my other friends tho. I l also trust her and I know she would be transparent with me if she had any issues paying the rent straight away so we could sort it.

Nope. I wouldn't either. I even refused being one for my DC.

I think the problem is that demand is outstripping supply and landlords feel entitled to ask for these things just because they can.

I don't think that's the case. I've seen reasonably priced rentals sit on the market and get reduced by 20% over three months in my area this year. Not just one or two - dozens.

I think the problem is - as bloody always - insurance companies.

Landlord insurance can cover void periods of 6-12 months, which is a hecking lot of money, but in return, they can stipulate whatever they want.

I'd never seen anything like it until Covid, and I've rented for decades. All of a sudden, I'm being sent draft tenancy agreements with QUARTERLY inspections listed on the T&Cs (which I refused to sign, I went elsewhere).

One agent wanted to inspect after six weeks, then every three months. I did a bit of digging at the time and it all led back to insurance companies. They got burned a lot during Covid and now they're setting insane restrictions.

Landlords who don't have shit insurance policies or who are so wealthy that they don't need them won't need to force tenants to put up with these measures.

I believe you OP. I rented a couple of years ago and it was madness. I had 40k salary, 90k equity in the bank, offered to pay a year upfront - on a flat for 1100k a month. They refused unless I got a guarantor. Im 50, and had to get my mid 70s parents to be guarantors - and they nearly didn't accept them because they werent working! They own, living off good pensions, and had 200k in the bank. It was utter madness. I got it in the end but I dont think people realise how hard it is to rent now. It really shocked me.

I feel for you.

Only reason I would agree would be if I could afford to pay the rent and not get the money back… so it would be a no from me. Appreciate you may be good for the money but you can never be sure and maybe they aren’t in a position to be a guarantor.. how well do you know their finances

And you of course have every intention of paying, it isn't a question of that. It is that life has a way of throwing a spanner in the works sometimes.

Btw, if you're struggling to find a decent lease because of the dog, if you possibly can, try to find a little cottage in the countryside/a bit more rural instead of a flat in a town or city. I had a 3/5 success rate when I started calling about properties with a bit of green space around them, and zero luck when I was looking in towns. One of of five outright said no, another said 'eww, cats, no - dogs okay' and the other three all said 'fine.' Countryside/rural folks are used to there being animals everywhere/animals messing up homes (which one of ours cat duly DID - we replaced a carpet before leaving).

It's really bad they expect a guarantor then as surely most people won't be able to get one unless they have parents willing to do it. I can't really sympathise much with landlords not being willing to take what is quite a small risk if you're paying them several months rent in advance and have evidence of income. With DD's last rental property she just paid six months in advance each time and the landlord seemed happy with that.

OP, general an advice from financial advisors, the finance pages of the papers and Citizen's Advice is never to stand as guarantor unless people are prepared to risk thousands. Too many cases of people losing jobs, becoming ill or just defaulting, leaving the guarantor thousands down.

When I was a young 20 something I needed a guarantor on a rental property. My parents were retired so couldn't do it, lacking sufficient income. Another relative agreed on the condition that I gave her the full amount of money they were going to be guarantor for the duration. I put it in their bank account and we had a contract drawn up for it.

Since you have the equity from your house sale @IWillAlwaysBeinaClubWithYouin1973 would this arrangement work for you? It removes the financial risk from the other person. Any risk present is your own.

Obviously there are financial implications for the other person where this won't work - if extra savings mean they're no longer entitled to benifits or would end up paying tax on savings etc

could your daughter be your guarantor?

I wouldn’t do it for my kids either, once they were earning and working. Did as student…well even then didn’t, we just paid a years rent upfront and they had a loan to pay us back
landlords asking for guarantee is a con. Never used to be case. It’s just bloody greed for them to avoid going to court to recover debts. My exh was landlord …accidental one in that he inherited property,and we didn’t want to sell immedately…we never needed guarantor …just a deposit…

so OP, NOPE …neither a borrower or lender be rings as true today as 400 years ago

This was a good idea by your parents, we never thought of that ….

Why are you surprised? I love and trust my friends completely but to go into a legally binding agreement that involves my money is a step too far. It's one thing to be a guarantor for you childs student house, as my dad did for me, but for a friend it's just too high risk. I understand you know, your trustworthy and wouldn't leave them to pay your debts, but they don't know that.

Agreed. There’s always a lot to learn about and discover in these circumstances, and it can be a stressful business. Good luck OP.

But that method wouldn't guarantee the OP would leave on the due date.

I would never do it either. You only have to look at other threads on here to know that people don’t always pay their rent.

But the landlord could just sue OP for the money. She has income from her pension so why rely on suing a guarantor rather than OP?

It alarms me that you did it for a friend without actually knowing what you were signing up for!!

That's the whole point of a guarantor, though, that you can end up with a huge problem.

I would never do it. I’m in a position that if I ever had to move from my rented home , I would likely need one due to credit and it’s worrying but I would never ask someone.

My credit is low due to something I could never have foreseen changing our financial situation drastically. Thankfully, I could still afford rent - had I not been married , and been a single parent , I would not have been able to afford rent. There was nothing I could have done and I would never do anything deliberately to put a guarantor in that situation but at that point it was something that I had no control over. You are asking someone to be willing to pay your rent and putting themselves as liable if you can’t , and although you may never do that intentionally it could happen

However , if you’re in a position that you have been accepted as someone else’s guarantor then you will likely not need one yourself. Usually a guarantor is asked for if you have a low credit score , if you have good credit and an income then you will probably not need one .

I can’t believe you think a friend should!

id never be a guarantor for anybody! My sister asked once and I said absolutely not.

my husband recently lost his job and for the last 6 months we’ve been living off of savings and my meagre income. Getting a new job has not been easy and we are getting very worried now. Imagine if someone was our guarantor and we ran out of savings?

you never know what’s around the corner and you’re the one choosing to rent and not buy.