Guaranteed responsibility - What you need to know about being a guarantor

So you've been asked to stand as guarantor.

A guarantor is typically needed for anyone who wants to be a tenant but unfortunately has a low credit score, insufficient income or isn't quite old enough. People tend to know it means you are responsible for backing them up, but do you know just how much responsibility you are taking on? Lettings Manager Louise Rock is here to fill you in…

Cost liabilities
When you sign as a guarantor, you are responsible for more than just the rent payment.

“It means you are responsible for the utilities too, so if they need to be chased for their bills, you could be next on the list.”

Any and all damage could end up on your doorstep.

“Any work which needs repairing in the property, which the tenant doesn’t fix or pay for, could end up being billed to you. When standing guarantor, you are signing a legally binding document basically confirming that if the tenant can't pay, you will step in.”

Referencing and requirements
As guarantor, we need to make sure you are up for the task too.

“We reference you too as though you were moving in, meaning we carry out a credit check to make sure you are capable of fronting any costs which end up your way. We also check that you're a good tenant if you're renting yourself and that your income is sufficient enough to cover the rent should the tenant fail to.

"There is a minimum age requirement also, which is 18 years old. Legally, we cannot name an occupant on a tenancy if they are aged 17 or under."

Affordability calculator
Typically, your annual income needs to be at least 3 times the amount of the annual rental figure. A few examples are shown below:

Monthly rent        Yearly rent       Guarantor's income
​£350                        £4200                £12,600
£450                        £5400                £16,200
£550                        £6600                £19,800
​£650                        £7800                £23,400
​£750                        £9000                £27,000

Term of agreement
"It is a very common misconception that guarantors are only liable for the initial 6 month tenancy" Louise explains. "We make it very clear to all guarantors that the joint responsibility lies with the guarantor for the entire duration of the agreement; this includes tenancies that roll onto a monthly/periodic basis as well as fixed term ones.

Only in exceptional circumstances would a landlord agree for the guarantor be removed from the agreement, as they're normally there for a reason".

Other examples of standing guarantor
While guarantors are needed in letting, they are even more common in companies.

“Loan companies can now operate using just a guarantor system, Amigo Loans being a prime example. Guarantors are so effective that they even accept those with bad credit, right down to County Court Judgements (CCJs) and defaults. They are becoming a big and often essential part of some business and money transactions.”

But the most important part of being a guarantor?

“You are doing a great thing for someone. You place your trust that they won’t need you, but if they do, you’ve got their back. Best case scenario? The most they owe you is a big favour.”

For more information or advice, please don't hesitate to contact us. Why not ask about our fantastic referral scheme while you're there, you could earn at least £200...

(Sources: Amigo Loans, Rent Shield)

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