The information in this post applies to residential tenancies in England and Wales.
What is a Tenant Guarantor?
A “Guarantor” is the person that chooses to accept the liability on behalf the tenant in the event of the tenant being unable to meet their obligations under the tenancy agreement, whether it is for rent arrears or damage to the property. The Guarantor is legally bound to accept the liabilities on behalf of the tenant i.e. if the tenant falls into arrears and cannot pay what is owed, the landlord can pursue the guarantor for the money.
Who can act as the Guarantor?
A “Guarantor” is usually a friend or family member of the tenant that has agreed to vouch for the tenant and accept the liabilities on behalf of the tenant. But essentially, anyone can be a guarantor. However, the landlord also has the right to deem any prospective guarantor as being unsuitable. While the landlord can’t force the tenant to find another Guarantor, the landlord can refuse to give tenancy based on the Guarantor candidate. This maybe the case if the Guarantor has a low income, fails credit checks, or is unlikely to be able to cover the tenant’s liabilities.
Being a Guarantor is not a task that should be taken lightly; when a guarantor enters into an agreement he or she normally agrees to meet the full obligations under the tenancy agreement on the tenant’s behalf. So it is imperative the Guarantor understands their responsibilities and the risks involved.
In any case, Guarantors should be referenced like just like tenants, to ensure they are suitable.
What is a Tenant Guarantor Form?
A Guarantor form acts as a legal piece of insurance to typically protect the landlord against rental loss, damages and any ensuing legal fees that is incurred by a tenant. The Guarantor form is a legal contract enforcing the agreement.
Putting a Guarantor agreement in place is required by many landlords as it provides a thick layer of security for landlords at no real extra cost.
The guarantor form is NOT a substitute for an Assured Shorthold Tenancy Agreement contract; it should always be a supplement to the tenancy agreement.
Download a Guarantor Form
The wording of the Guarantor form is important as it is a legal contract and can be used to enforced by the courts according to how it is worded, so it is crucial to use one from a reputable source. It is strongly advised to seek legal advised from an expert before using any guarantor contracts.
The Guarantor forms available for download on this website have been written by Stones Solicitors LLP. They are listed as a Top 200 Law Firm and is recognised by the two leading independent directories, Chambers and the Legal 500. Stones have expert solicitors specialising in landlord law. Purchase one of our Tenant Guarantor forms for just £3.99, and reuse it as many times as you wish.
What is typically found in a Guarantor form?
While Guarantor forms/contracts differ from one another, they all generally contain the same core information, which is as follows:
- Date – the date at which the Guarantor form was signed
- Guarantor – the name of the Guarantor
- Landlord – the name of the landlord
- Tenant – the name of the tenant that is being Guaranteed
- Property – the address of the property that is being rented
- Tenancy Period – the start and end date of the fixed terms of the tenancy
- Rent – how much rent is being paid
- Guarantee Terms – the terms of the guarantee
- Guarantor’s Obligations – a list of obligations the guarantor is agreeing to
- Signatures – the Guarantor’s signature. It is also recommended to get a signature from a witness.
Finding a suitable Guarantor
Finding a suitable guarantor is often as equally important as finding a suitable tenant, but it’s important to note that a guarantor should never compensate for an unsuitable tenant. Both tenant and guarantor should have all the correct requirements (e.g. suitable income and references)
If the prospective guarantor hasn’t got a job, money or any assets, it will make it extremely difficult for them to cover any outstanding costs incurred by your tenant, so they effectively become pointless.
In order to find a suitable guarantor, it’s always worth getting a prospective guarantor to complete a guarantor application form and doing a credit check on them, so you can assess whether or not they will be suitable.
If the guarantor doesn’t seem suitable, you may either want to ask your prospective tenant to find someone else who is, or find a tenant that’s able to provide a qualifying guarantor.
How much does a Guarantor have to earn?
The standard amount tends to be three times the annual rent. Slightly higher than tenants, generally because they have their own dependencies/financial obligations. So, if the rent is £850, the guarantor is usually expected to earn at least £30,000.
Does my tenant need a Guarantor?
Guarantors aren’t legally required to form a legally binding tenancy, so you don’t “need” one. In fact, many landlords don’t require tenants to have.
However, it’s advised to always have a Guarantor in place. Not only do they provide landlords with extra security, but it also gives the tenant more incentive to pay their bills on time (some times).
If I had to choose between applicants that are able to provide a guarantor with those that aren’t able to, I’d go with the former every time!
When should I use a Guarantor?
It is most common for the landlord to require a guarantor when the tenant has a low credit score or low income. Parents of young people or students are also often asked to guarantee their children’s rent. However, it is becoming increasingly common for landlords to require a guarantor regardless of the tenant’s income and credit score.
Parents need to be careful when being a Guarantor for their child in joint tenancies or groups because they usually carry joint and several liability. This means that the parent is essentially guaranteeing all the other residents as well, not just their child.
What if my tenant falls into arrears?
In the event where the tenant falls into arrears and/or needs to repay any other outstanding debts, the liability falls onto the Guarantor.
If the guarantor fails to cover the costs, then the landlord can take legal action against the guarantor. So it is always important to ensure the guarantor has sufficient collateral before allowing them to be the guarantor. A lot of landlords hold a strict screening process for acceptable guarantors e.g. a well-paid job and owning a property are common prerequisites.
Types of Guarantee
There are two types. The first one, the Guarantor clauses are found as part of the Tenancy Agreement Form (with in the same contract). In this case, the tenant, landlord and guarantor sign the tenancy agreement. The other type is a deed of guarantee, which involves a separate contract; almost like another tenancy agreement, but for the guarantor, which specifies their obligations.
When and who signs the Guarantor form?
The landlord, Guarantor and witness of the Guarantor are usually required to sign the contract for it to be properly executed, this is especially true for a dead of guarantee. The witness should also print their name, address and occupation, and should be present when the Guarantor signs the contract.
The guarantor should be provided with a copy of both the deed of guarantee and the tenancy agreement, so they’re clear about their liabilities and obligations.
How do I stop being a Guarantor?
There’s a more detailed blog post on this discussion over here, How Do I Stop Being A Tenant Guarantor?
Disclaimer: I'm just a simple landlord blogger, I am not qualified to give legal or financial advice. Any advice I give is my opinion based on my experience, and is never legal or professional advice. You should always get professional advice on any legal and financial matters!
Any documents you download from this website are just examples of its kind and should be checked by a professional. I give no warranties or representations concerning the documents, and accept no liability in relation to the use of the documents.