Cost Of Living Crisis: Should All Landlords Require Guarantors?
As we come out of the pandemic, many emergency protections for both renters and landlords are disappearing. As that happens, more renters are falling behind on their rent. In many cases, it is likely that they will never catch up and will end up being evicted. This isn’t good for either tenants or landlords. As a result, this trend of more evictions is leading more landlords to ask their renters to get guarantors.
What Is A Guarantor?
A guarantor is a person who agrees to pay the rent if the renter is unable to do so. Guarantors are more common with student properties or renters under the age of 21. In these cases, it is usually the renters’ parents who act as guarantors.
In the case that the renter doesn’t pay, the landlord asks the guarantor to pay. If the guarantor doesn’t pay and the landlord pursues legal action. It is the guarantor that the landlord takes to court.
Both the renter and the guarantor will need to be checked to see that they have the means to pay the rent. This usually means that the landlord will run credit checks on both individuals.
Should All Landlords Ask For Guarantors?
Requiring a guarantor gives landlords some extra piece of mind. It is almost like having an extra layer of insurance. If you have concerns that a potential renter may not be able to pay, then asking for a guarantor can help to mitigate some of the risks of renting to people with a poor credit history.
However, asking for a guarantor may limit the number of renters who will consider your property. Not everyone has someone in their life who is willing or able to take on the financial responsibility of acting as a guarantor.
It’s a balancing act, and each individual landlord needs to make their own decision. However, it does seem that more are deciding it is worthwhile. In the last four years, the number of landlords requiring guarantors has risen by 36%.
How Is The Cost Of Living Crisis Affecting Renters?
Rental prices have been climbing for a long time now and are currently at a 13 year high. Just since the beginning of the pandemic, the average monthly rent has gone up by £64. For a single tenant, their rent will likely account for 37% of the gross income. In other words, renters are finding their finances increasingly squeezed.
With energy prices set to rise yet again, it’s only going to become more challenging for tenants to afford to pay their rent. If the cost of living continues to increase, it would be reasonable to expect that more people are going to end up getting behind on their rent. All it takes is one unexpected financial setback for people to be put in the position of choosing what they pay for.
With renters feeling pinched and concerned about their finances, it’s only natural that landlords feel the same way. It is probably no surprise that the places with higher living costs are also seeing the largest increase in guarantor required leases.
So, with the financial situation becoming more precarious, do you agree with guarantors for rental properties?
Getting an Assessment
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