When renting a home, the majority of renters need to undertake referencing checks to see if they’re suitable to rent. These checks include employment and address history, as well as a credit report. Most renters need to earn 2.5x the annual rent and have a decent credit history to pass successfully, but what happens when they don’t meet the requirements?
Does it mean you have to say goodbye to your new home and head back to the drawing board in the process of renting? Fortunately, a failed reference doesn’t mean all is lost, and you can still move into your new place with the help of a guarantor.
But what is a guarantor, you ask? In this guide, we’re bringing you the lowdown on everything there is to know about being a guarantor for a rental home.
What is a guarantor?
A guarantor is a person who takes on the legal responsibility for the rent in the event the renter is unable to make payments. Most tenant references will determine whether or not you can comfortably make rental payments, and if you can’t, a guarantor will step in to add extra security.
Many renters moving into a new home for the first time often need a guarantor. This is because they don’t have any credit history or previous renting experience and are likely to be students, someone starting their first job or moving from overseas. Should the renter pay the rent without any issues, the guarantor won't need to make any payments.
Who can be a guarantor?
A guarantor is typically a relative or close friend of the renter, but they don’t always have to be. The main aspects needed to qualify for being a guarantor include having a good credit history and earning enough money to cover the annual rent.
Some guarantors might be rejected if they are retired and can’t prove they have significant savings, live abroad or don’t own their property. However, these requirements for a guarantor are usually decided by the landlord. Most landlords will carry out a credit check on a guarantor or ask for proof of their income.
What are the guarantor’s responsibilities?
A guarantor legally agrees to pay the rent if you can no longer afford to. Guarantors have no claim to the rental property, but they may be held liable for something called “joint liability”. This is when someone agrees to be a guarantor for one person in a house of multiple occupation, but the tenancy agreement states they are responsible for the entire household.
Therefore, it’s always extra important to double-check the guarantor agreement before signing any rental contract. Otherwise, guarantors may find themselves signing up for more than they initially bargained for.
What if you can’t get a guarantor?
Even if you have a poor credit history or low income, the final decision rests with the landlord, and they may still decide to rent the property to you without asking for a guarantor. Some charities also provide rent deposit and bond & guarantee schemes if you are unable to acquire a suitable guarantor. However, you may be required to pay back the money you received from these schemes.
Hopefully, you won’t need to use a guarantor when you move into your next home. Yet, if the need for one arises, it’s essential to know the ins and outs about using a guarantor. Renting is an exciting experience, especially if it’s your first time living on your own. And having a guarantor could be necessary for getting the keys to your first home.