What Should we Know About Being a Rental Guarantor?
Discussion
We have been asked to be rental guarantors for someone we’ve known for a year or so - effectively a single mum (husband is still in Ukraine) with two lovely kids. Works part time and seems utterly reliable.
I’m inclined to say “yes” as I don’t want to say “no” (if that makes sense!), I don’t think she’d have asked if she wasn’t desperate, and we can actually afford it (which we certainly couldn’t have for most of the last twenty years or so!).
Apart from potentially being on the hook for £1200ish a month (which would really smart, but not endanger our minuscule mortgage) any other less obvious downsides?
It will probably be me signing, as my (higher earning) wife is reluctant to fill in paperwork revealing her decent salary to a friend.
I’m inclined to say “yes” as I don’t want to say “no” (if that makes sense!), I don’t think she’d have asked if she wasn’t desperate, and we can actually afford it (which we certainly couldn’t have for most of the last twenty years or so!).
Apart from potentially being on the hook for £1200ish a month (which would really smart, but not endanger our minuscule mortgage) any other less obvious downsides?
It will probably be me signing, as my (higher earning) wife is reluctant to fill in paperwork revealing her decent salary to a friend.
You need to check exactly what it covers. Is it only rental payments or does it cover other costs and expenses? If it is only rent then for how long/how many payments could you be liable? Bear in mind they may not ask for £1200 a month if there is a default, they could ask for X months of arrears all at once.
Generally when lenders get guarantees from individuals they require the individual to get independent legal advice to ensure the guarantor knows what they are signing up to (and so they can't challenge it at a later date). I suspect a landlord may not be so strict in this but it is good advice for you to speak to a solicitor either way.
With any contract the devil is in the detail.
Generally when lenders get guarantees from individuals they require the individual to get independent legal advice to ensure the guarantor knows what they are signing up to (and so they can't challenge it at a later date). I suspect a landlord may not be so strict in this but it is good advice for you to speak to a solicitor either way.
With any contract the devil is in the detail.
Nevinski said:
You need to check exactly what it covers. Is it only rental payments or does it cover other costs and expenses? If it is only rent then for how long/how many payments could you be liable? Bear in mind they may not ask for £1200 a month if there is a default, they could ask for X months of arrears all at once.
Generally when lenders get guarantees from individuals they require the individual to get independent legal advice to ensure the guarantor knows what they are signing up to (and so they can't challenge it at a later date). I suspect a landlord may not be so strict in this but it is good advice for you to speak to a solicitor either way.
With any contract the devil is in the detail.
Won’t get a specific contract. As guarantor you’re a co-signatory of the agreement and on the hook for all of the liabilities of the tenant. Generally when lenders get guarantees from individuals they require the individual to get independent legal advice to ensure the guarantor knows what they are signing up to (and so they can't challenge it at a later date). I suspect a landlord may not be so strict in this but it is good advice for you to speak to a solicitor either way.
With any contract the devil is in the detail.
Arrears, costs, damage. Utilities too if they are included (not usual).
It doesn’t take 18 months (as someone has suggested) to evict someone, but if they’ve treated the place badly or smash it up on the way out (rare) there would be a big bill heading your way.
You could suggest trying to cap it, or time limit it until she’s built up enough credit/rental history to not need it, but the only way to do that would be to have a sensible face-to-face conversation with the landlord. In the circumstances you describe, as a landlord I would be up for that.
Worth being aware that if she’s getting the housing element of UC (not sure if eligible?) this can be I’d directly to the LL. You could insist that this takes place as part of the guarantee and that the LL is responsible for notifying you if the payments stop.
You're an idiot
If you're a soft idiot, find out if they'll accept a huge upfront bond which you'll lose if anything goes wrong. It's fixed and you can see the scale of your loss.
You're very kind and decent, more so than most, however I too wouldn't be be signing anything open ended.
If you're a soft idiot, find out if they'll accept a huge upfront bond which you'll lose if anything goes wrong. It's fixed and you can see the scale of your loss.
You're very kind and decent, more so than most, however I too wouldn't be be signing anything open ended.
We did similar to this a couple of years ago for a young student who my wife was tutoring and mentoring. It wasn't exactly the same as it was for student accommodation and limited to one academic year's rent, but still would have stretched us if she'd defaulted.
Am I glad we did it? Yes, we gave a step up to a young girl who hadn't had much luck before this, and it turned out very well in the end.
Did it stress us? Absolutely, every time she had a wobble, and came crying to my wife about giving it all up. It gave us an added incentive to take an interest and help her as best we could.
Would I do it again? Yes as long as we trusted her to do her best, and as long as we were prepared for a possible big loss, and as long as we were willing to monitor her progress and put in some time to help her through any difficulties she might have.
Am I glad we did it? Yes, we gave a step up to a young girl who hadn't had much luck before this, and it turned out very well in the end.
Did it stress us? Absolutely, every time she had a wobble, and came crying to my wife about giving it all up. It gave us an added incentive to take an interest and help her as best we could.
Would I do it again? Yes as long as we trusted her to do her best, and as long as we were prepared for a possible big loss, and as long as we were willing to monitor her progress and put in some time to help her through any difficulties she might have.
Everyone is utterly reliable right up to the moment they let you down.
You would be mad to involve yourself financially with someone you have effectively zero influence over. I wouldn't do it for family, let alone a really good friend, and for someone I just randomly wanted to help? No chance.
You would be mad to involve yourself financially with someone you have effectively zero influence over. I wouldn't do it for family, let alone a really good friend, and for someone I just randomly wanted to help? No chance.
Might feel a noble thing today but the consequences far outweigh any benefits for yourselves because there are no benefits.
Hard no.
Years ago on a four bed student flat my parents acted as guarantors for myself, my brother and another two mates.
12 x £550 payments for a year lease. Four tenants, so £26,400.
Everything went fine until one of the lads came into some momey and paid off his lease with two months to go. £1100. He cancelled his direct debit and the letting agent kept saying that they only recieved 3 x £550 for the subsequent two months that followed which was correct.
Later, they managed to convince themselves that they had not been paid and took it out of the rental which my folks had also fronted up. In trying to get this back they then had to deal with the letting agents coming after the guarantors, my parents, for the amount instead. It took a lot of hassle to try and resolve as the other two lads had left the county by then and weren't really interested in helping out with proof of payments. Ultimately, my folks were £1100 out of pocket.
They refused to get involved as guarantors for any future rentals which was understandable.
Hard no.
Years ago on a four bed student flat my parents acted as guarantors for myself, my brother and another two mates.
12 x £550 payments for a year lease. Four tenants, so £26,400.
Everything went fine until one of the lads came into some momey and paid off his lease with two months to go. £1100. He cancelled his direct debit and the letting agent kept saying that they only recieved 3 x £550 for the subsequent two months that followed which was correct.
Later, they managed to convince themselves that they had not been paid and took it out of the rental which my folks had also fronted up. In trying to get this back they then had to deal with the letting agents coming after the guarantors, my parents, for the amount instead. It took a lot of hassle to try and resolve as the other two lads had left the county by then and weren't really interested in helping out with proof of payments. Ultimately, my folks were £1100 out of pocket.
They refused to get involved as guarantors for any future rentals which was understandable.
I can see your motive.
If it were me I would not guarantee it but would offer a deposit of x months rental to be held as a bond so you liability is limited.
What you don't want as others have expressed is a heap of back rent ( bear in mind agents don't communicate well so the first will will find out is " she is 6 months late we want money ". ). If she can't pay then citizen advise will say don't leave as you are making yourself homeless which then hits local authority eligibility. So you are then On the hook for x months whilst it goes to court. She will then say she will pay and has a child. The court will agree and give another few months. Then there is damage
So do it but do it with a fixed sum.
If it were me I would not guarantee it but would offer a deposit of x months rental to be held as a bond so you liability is limited.
What you don't want as others have expressed is a heap of back rent ( bear in mind agents don't communicate well so the first will will find out is " she is 6 months late we want money ". ). If she can't pay then citizen advise will say don't leave as you are making yourself homeless which then hits local authority eligibility. So you are then On the hook for x months whilst it goes to court. She will then say she will pay and has a child. The court will agree and give another few months. Then there is damage
So do it but do it with a fixed sum.
Colonel Cupcake said:
Why on Earth would you want to provide an unlimited liability, open-ended insurance policy for free? Would Direct Line do that? Don't even consider it. If the landlord wants that kind of insurance policy, direct him to the relevant provider.
The landlord has already risk assessed and deemed the tenant to be an unsuitable risk at the proposed rent.A landlord might be able to get insurance but the cost would end up being passed to the tenant, who probably can't afford it (otherwise there wouldn't be this issue in the first place).
It isn't about what the landlord "wants", its about finding a way for that tenant to be able to rent.
LooneyTunes said:
The landlord has already risk assessed and deemed the tenant to be an unsuitable risk at the proposed rent.
A landlord might be able to get insurance but the cost would end up being passed to the tenant, who probably can't afford it (otherwise there wouldn't be this issue in the first place).
It isn't about what the landlord "wants", its about finding a way for that tenant to be able to rent.
Having been through this process with both my kids it's probably the insurance company who want the guarantee. A landlord might be able to get insurance but the cost would end up being passed to the tenant, who probably can't afford it (otherwise there wouldn't be this issue in the first place).
It isn't about what the landlord "wants", its about finding a way for that tenant to be able to rent.
A proper palaver that.
TownIdiot said:
Having been through this process with both my kids it's probably the insurance company who want the guarantee.
A proper palaver that.
I very much doubt it is anything to do with an insurance company. A good guarantor is in effect acting as the insurance company.A proper palaver that.
Quite rightly, the landlord wants the best and easiest way to ensure the rent (and any other money owed him) is received.
I have guarantored my student daughters and would always do so. (I ensured it was limited liability therefor not guarantoring the full monthly rent of a joint contract)
No way I would consider doing it for anybody else.
andyxxx said:
I very much doubt it is anything to do with an insurance company. A good guarantor is in effect acting as the insurance company.
Quite rightly, the landlord wants the best and easiest way to ensure the rent (and any other money owed him) is received.
I have guarantored my student daughters and would always do so. (I ensured it was limited liability therefor not guarantoring the full monthly rent of a joint contract)
No way I would consider doing it for anybody else.
In our circumstances it absolutely was. Entirely process driven by the agent.Quite rightly, the landlord wants the best and easiest way to ensure the rent (and any other money owed him) is received.
I have guarantored my student daughters and would always do so. (I ensured it was limited liability therefor not guarantoring the full monthly rent of a joint contract)
No way I would consider doing it for anybody else.
A hard no for anyone except my dependants. I know that sounds harsh but the potential outlay is huge, and whilst I appreciate the current situation in their home country, and with all sympathy, it would be too easy for someone who has not been here very long to fall foul of the intricacies of the system and you would be on the hook.
(Close friends have also asked before and I've refused it, for the reasons outlined by others above.)
(Close friends have also asked before and I've refused it, for the reasons outlined by others above.)
Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff