Maya Chen
A guarantor is someone who agrees to pay your rent if you can't. They are usually a parent or close relative, but they don't have to be. Landlords often ask for a guarantor if the prospective renter's credit score or income is below a certain level. In the UK, landlords will usually want a guarantor who lives in the country, as it's easier to take legal action if needed. Guarantors will need to undertake credit checks and obtain references, and they must demonstrate that they have sufficient funds to cover the monthly rent and any other liabilities. If you can't find a guarantor, there are guarantor companies you can hire, but these services are expensive.
| Characteristics | Values |
|---|---|
| Who is a guarantor? | A guarantor is a responsible third party (usually a parent) who signs the lease and agrees to pay the rent if the tenant fails to do so. |
| When do you need a guarantor? | You may need a guarantor if your credit score or income is below a certain level. Landlords may also ask for a guarantor if you are an international student or non-US resident. |
| Who can be a guarantor? | A guarantor can be a relative, close friend, or a guarantor company. In the UK, landlords usually prefer a guarantor who is a UK resident and a homeowner. |
| Guarantor requirements | The guarantor must have a good credit score and sufficient income or liquid assets to cover the rent. |
| Guarantor agreement | The guarantor signs a legal agreement outlining their obligations, such as paying rent and any damage caused. The agreement may extend beyond the fixed period and cover rent increases. |
| Alternatives to a guarantor | If you cannot find a guarantor, you can offer to pay more rent in advance, apply for rental assistance, or find a roommate who meets the requirements. |
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What You'll Learn
Who can be a guarantor?
A guarantor is someone who agrees to pay your rent if you do not pay it. They sign an agreement that outlines their responsibilities and when they have to pay. Guarantors can be relatives or close friends, but they do not have to be. Landlords and agents often check the guarantor's credit history, income, and money. They might also ask for references. They might also require the guarantor to be a homeowner.
In the UK, landlords usually want a guarantor who lives in the country, as it is easier to take legal action against a UK resident if they need to. This can be a problem for international students or non-UK residents. In such cases, the renter might be asked to pay more rent in advance.
In the US, guarantors in New York are usually required to provide documentation evidencing their liquidity (usually 80x the rent) and willingness to step into the renter's shoes upon default.
If you are having trouble finding a guarantor, there are guarantor companies that can guarantee the lease. However, these services are not cheap, with fees ranging from 4% to 10% of the annual rent, according to Experian.
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When do you need a guarantor?
A guarantor is someone who agrees to pay your rent if you can't. They sign an agreement that outlines their responsibilities and when they have to pay. While you don't always need a guarantor to rent a flat in the UK, many landlords and agents ask for one before offering a tenancy.
So, when do you need a guarantor? Here are some scenarios:
- Low credit score or income: If your credit score or income is below a certain level, a landlord may require you to have a guarantor. Most landlords require tenants to have a credit score of 600 or above and an annual salary of at least 40 times the monthly rent. If you don't meet these criteria, you may need a guarantor with a higher credit score and a higher annual income.
- No credit score: If you're an international student or non-U.S. resident, you may not have a credit score or rental history. In these cases, landlords may require a guarantor, although some may accept your international credit history.
- First-time renters: If you're a first-time renter without a rental history, a landlord may feel more comfortable renting to you if you have a guarantor with solid references and a track record of paying their bills on time.
- Students: Students who are studying full-time and not earning an income could benefit from having a guarantor with a steady income.
- High rental prices: With rental prices on the rise, you may need a guarantor if you're struggling to keep up with the cost of rent.
- Landlord's preference: Sometimes, a landlord may simply prefer to have the added assurance of a guarantor, especially if they have the slightest reservations about renting to you.
It's important to note that guarantors usually need to be UK residents, as it's easier for landlords to take legal action if needed. Additionally, guarantors may need to provide documentation of their income, undergo credit checks, and sign a legally binding agreement.
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What does a guarantor do?
A guarantor is a responsible third party, usually a parent or close relative, that signs the lease and agrees to assume the obligations set forth under the lease, notably the payment of rent. The guarantor acts as an insurance policy for the landlord, guaranteeing that the rent will be paid and that the landlord will not suffer losses due to renter insolvency.
The guarantor's income is what matters, and they will need to meet all of the financial requirements for the rental unit. This includes providing documentation evidencing their liquidity, usually 80 times the rent. The guarantor will also need to demonstrate their willingness to step into the shoes of the renter upon default. If the renter fails to pay the rent, the landlord can take the guarantor to court to enforce payment.
In addition to the financial burden, guarantor agreements can sometimes cause issues in relationships if the guarantor is unable to make the payments. It is important for both the borrower and the guarantor to carefully consider whether they can commit to maintaining the payments. The guarantor should also review the tenancy agreement to understand exactly what obligations they are guaranteeing.
Guarantor agreements can vary from lender to lender, and it is important to check the terms carefully. A guarantor agreement may also extend to other conditions under the tenancy, such as any damage caused to the property. The guarantor's liability may continue for as long as the tenancy exists and will only end if the tenancy is legally terminated.
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Guarantor companies
The guarantor company steps in and makes the monthly rent payments until the landlord finds a new renter. The renter is still liable to reimburse the guarantor company for these payments. This allows renters to access apartments that would otherwise be out of reach without a third-party guarantor. Guarantor companies are particularly useful for younger renters with little to no credit history, foreign renters without an established credit history in the country, or renters with weak credit but strong incomes or assets.
When choosing a guarantor company, it is important to research their reputation and read the fine print of the policy. Pricing varies, and more comprehensive policies tend to be more expensive. The policy may also include security deposit coverage, which protects the landlord against tenant damage.
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Guarantor agreements
A guarantor is someone who agrees to pay your rent if you do not pay it. They sign an agreement that outlines their responsibilities and when they have to pay. Guarantors are usually required when the renter is an international student, has a low income, or has a poor credit history.
- What the guarantor is liable for—rent, property damage, eviction costs, etc.
- How much the guarantor is liable for—one tenant's share or the total amount
- When the guarantor's liability comes to an end—at the end of a fixed-term tenancy or when the contract switches to a rolling periodic tenancy
Guarantors should carefully review the tenancy agreement and the guarantor agreement before signing to understand their obligations. The guarantor agreement should clearly state specific dollar amounts, payment deadlines, and what the guarantor needs to provide when called upon.
Examples of guarantor obligations
- Missed rent—if the tenant misses rent payments, the guarantor is responsible for covering the missed payments
- Late fees—if the tenant pays rent late, the guarantor may be liable for any late fees incurred
- Damages—if the tenant causes damage to the property, the guarantor may be liable for the cost of repairs
- Lease-breaking costs—if the tenant breaks the lease, the guarantor may be held liable for any remaining rent or fees
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Frequently asked questions
You don't always need a guarantor to rent a flat, but many landlords and agents ask for one before offering a tenancy.
A guarantor is usually a parent or close relative, but they don't have to be. Landlords and agents often check the guarantor's credit history, income, and money. They might also ask for references and that they are a homeowner.
A guarantor signs the lease and agrees to take on the obligations set forth, most notably paying the rent if the tenant fails to do so.
There are guarantor companies that can act as a renter's third-party guarantor. These services don't come cheap, with fees ranging from 4% to 10% of the annual rent.
