Table of contents:
What is a guarantor?
Who can be a guarantor?
Guarantor requirements
Professional guarantors
Why do guarantors exist?
How much does a guarantor need to earn?
Can a pensioner be a guarantor for renting?
What does a guarantor need to provide in the UK?
Does being a guarantor for rent affect your credit rating?
Can a guarantor be self-employed?
What if my guarantor does not earn enough?
Can you get out of being a guarantor for someone's tenancy?
Credit history in the UK
What is a guarantor? Let's nail the basics...
A rent guarantor is someone who will vouch for you if you can’t pay your rent. You may need one if you’re new to the country, don’t have a credit history, are self-employed or on a low income relative to the cost of your monthly rent. A guarantor signs a legal agreement to cover your rent payments if you can't. Getting a guarantor then lets you rent the property you want.
So, who can be a rent guarantor?
Parent or guardian
Students usually turn to a parent or guardian when looking for a guarantor. However, it’s vital for them to have a good credit history or be a homeowner for an agent or landlord to accept.
When looking for a private guarantor, tenants will usually look to people in a stable financial position or somebody they trust.
Guarantor requirements:
So what are the requirements to be a guarantor in the UK?
Your guarantor must be a UK resident
You cannot have a guarantor that lives abroad.
This is difficult for those coming to the country for the first time whether that’s to study or work. This is made worse with the difficulty of setting up a bank account straight away, making internationals unable to prove their income or savings.
Your guarantor must be at least 21!
Your guarantor needs to be over 21-years-old to vouch for you. It’s unlikely anyone younger would have a credit history or assets to be able to back you up.
The financial risk of being a guarantor should be considered when deciding to use a friend or somebody who is just 21 as a guarantor. If you cannot pay, this person will be legally responsible to take on the debt. Someone who is in their early 20s may not be in such a credible financial position to be able to offer that support in the case of defaults.
Professional guarantors
Like us! Professional rent guarantors act pretty much like any other guarantor: We step in if you can’t cover your rent. Professional guarantors are especially important for people that can’t get someone to vouch for them for whatever reasons, whether coming to the UK from abroad or being self-employed.
Why do guarantors exist?
Here is a scenario many internationals or tenants in the UK find themselves in when trying to rent a property:
Scenario
You’ve been looking around for a new home for ages. You finally find your perfect place. You tell the agent you're interested. But next they ask you for a guarantor. And you're stuck. You know you need to move fast before someone else snaps up the property. But who can be a rent guarantor?
If you’re lucky, you could reach out to a parent or relative and see if they can vouch for you if you don’t make your rent. This may not be an option for you. This is where Homeppl Guarantid come in.
How much does a guarantor need to earn?
The amount a private guarantor needs to earn in order to become a legal guarantor changes relative to the cost of the tenancy agreement. Most landlords typically require a guarantor to have an annual income of at least 40x the monthly rent.
Private guarantors will go through the same referencing checks as the tenant but their incomes will be assessed at a higher rate. Proof of income and financial history will too be scrutinised.
Can a pensioner be a guarantor for renting?
A guarantor can be retired. People are judged on their financial status, it is not a requirement for that to come from a working salary. Somebody may be able to financially cover the rent payments of your tenancy agreement and this may come from a savings pot or a pension.
However, as with asking someone in their 20s to be your guarantor, financial liability must be remembered. With professionals guarantors such as Homeppl, we're happy to take on your financial risk at no personal cost to your loved ones.
The age to be a UK guarantor is between 21 and 75.
What does a guarantor need to provide in the UK?
Guarantors will go through the same Homeppl referencing process as tenants and as such their income and affordability, residential history and identity will be scrutinised. Supporting documents for those checks, such as bank statements, passports and proof of address will be required to complete the checks.
Does being a guarantor for rent affect your credit rating?
In a tenancy agreement if the guarantor is never required to cover the rent of the tenant then the simple act of being a guarantor will not appear on the guarantor's UK credit file.
If the tenant defaults on their rent and the guarantor is now responsible for covering the payments, that will then appear on a UK credit file.
Can a guarantor be self-employed?
A guarantor can be self-employed.
As long as they are able to show that they have a regular income and pass an affordability check then they will be eligible. It all comes down to the question of risk. The current cost of living crisis will have a strain on small businesses in the UK and even self-employed incomes may be affected.
With a commercial guarantor service such as Homeppl, we assume that financial exposure instead.
What if my guarantor does not earn enough?
If you are opting to use a personal guarantor, IE a friend or a family member it is vitally important that you chose someone who also matches the affordability criteria as they will also be assessed for liability reasons. Our criteria for guarantors is 22x the monthly share of the rent.
If you chose a guarantor company like Homeppl, you would not need to worry about if your guarantor earns enough or not, as we will be your legal guarantor.
Can you get out of being a guarantor for someone's tenancy?
The only way of being released from your liabilities as a guarantor for someone's rent is by gaining the consent of the landlord. It is at their discretion.
In many cases, the landlord may be a property management company or a developer and it is unlikely you'll be able to relinquish yourself of these duties easily once the tenancy agreement has been signed.
Looking for a new home, but don't have the right credit history to rent?
As we've iterated in this article, professional guarantors are a fantastic option for assuming financial risk instead of friends and family but they also provide a useful service if you don't have the right UK credit history.
Not many people know professional guarantors exist. So they panic when trying to find a rental property if they don't have family or friends to vouch for them. This includes people like students, internationals as well as the self-employed.
In fact, almost a third of tenants applying to rent a property in the UK are discriminated against because they don’t tick the traditional boxes which rely too heavily on credit files. For example, in the rental market, tenants would be required to pay 50% - 100% of the rent upfront or find a UK-based guarantor (who’d need to be a UK homeowner and earn c. £84k per annum).
But, you can avoid all this stress by using us as a professional guarantor. This is done using our innovative data-validation technology to check you meet our minimum requirements, giving you an answer in minutes. This means we can approve people that others can't!
Since October 2020, we've helped 21, 744 people to be approved for their rental property who would otherwise have been discriminated against. Collectively we helped our tenants save £22m on upfront rental payments.
Here at Homeppl Guarantid, we foster financial inclusion, so we help quality renters rent without discrimination or small print conditions. Our mission is to deliver a fair guarantor service, this includes fair referencing, fair pricing and finding a home for those that can’t.
