A guide for guarantors
Before agreeing to be a guarantor, it is important you fully understand the extent of what you are guaranteeing and for whom you are providing the guarantee.
Situations when we require a guarantor
Guarantors may be required where the tenant is in one or more of the following situations: -
- Tenants who are students or sharing a tenancy with someone who is not a relative/partner
- Tenants in receipt of Housing Benefit
- Tenants with a County Court Judgment or other credit issues
- Tenants who have come into the UK from other countries and are unable to prove a credit record
- Tenants who are unable to provide satisfactory references
- Where there are concerns the tenant may struggle to meet the monthly rental payment or proportion of the rent.
A Guarantor must be able to fulfil the following criteria: -
- Be a UK resident and ideally a home owner
- The rent guaranteed must be less than 40% of their salary
- Must not have any detrimental credit registered against them
- If not found on the Electoral Roll, they must be able to provide Proof of Residency
- Must be able to sign the Agreement of Guarantee a minimum of 24 hours prior to the tenancy commencing as shown on the Tenancy Agreement – this does not affect your statutory rights under The Consumer Protection (Distance Selling) Regulations 2000.
The Guarantor’s guarantee
When a tenancy is entered into, the occupants named on the Tenancy Agreement are no longer individuals but become collectively one entity known as the “Tenant” and are therefore jointly and severally liable for the rent and the costs of any damage caused by the tenant during the tenancy. The responsibilities/liabilities as a guarantor are then also deemed to be “joint and several”. This means that, if there is more than one tenant included in the Tenancy Agreement, the liability will extend to guaranteeing any losses caused by any or all of the tenants named on the Tenancy Agreement.
The “Guarantee” will be limited to the proportion of the monthly rent shown on the Agreement of Guarantee. In the case of sharers, if any one sharer requires a guarantor, the guarantor can guarantee a proportion of the rent, provided the Agreement of Guarantee shows all the tenants as “jointly and severally” responsible.
Agreement of Guarantee
By signing an Agreement of Guarantee, the guarantor agrees to indemnify the Landlord against all costs, losses and expenses arising through any breach of the Tenancy Agreement by the tenants named on the Tenancy Agreement, including rental payments. Your liability for rental payments will be limited to the proportional amount stated on the Agreement of Guarantee. The guarantee lasts for the entire length of the tenancy including any extension, continuation or renewal of the tenancy. The guarantee will also apply to any rental increase agreed by the Landlord and Tenant during the tenancy.
Recovering losses
Every attempt to recover outstanding rent payments and/or losses from the tenant will be made. However, if this is unsuccessful, the guarantor will be responsible for settling any debts outstanding from any of the tenants named on the Tenancy Agreement. The Agreement of Guarantee creates a legally binding contract. If you do not fully understand the nature of the agreement, you should take independent legal advice before signing the contract.
Disclaimer
This guide is intended to help readers navigate their way through the letting process under the estate agency systems in England and Wales. Readers take any advice at their own risk. Oyster Estates accept no responsibility for any action taken, or loss occurring, as a result of any advice and/or information in this guide.
