UK Landlord Forum / Life

Hello all,
I need some advice about the guarantor agreement regarding the point in red:


5. Where the Rent, or any portion of it, is paid by housing benefit or other benefit scheme, the Guarantor agrees to pay the Landlord or Agent for the amount of any claims arising from overpayment, which may be made by the local authority in relation to the specified Tenant(s). Such overpayments may occur at any time, either during the tenancy or within six years thereafter.

My potential tenant gets housing benefit but he is going to pay me the rent in ful himself (I am not dealing with the council), so is the above point applicable to me?

The wording of Guarantor contracts is pretty academic in my experience.They are not worth the paper they are written on.I never take a tenant who requires one,based on a couple of bad experiences in the past.

The Council is still paying it. You wouldn't normally deal directly with the Council. Tenants have to have a pretty good (bad?) track record of not being able to handle their money affairs to arrange direct payment these days. In effect, they have to be feckless or addicts of some kind (drugs, gambling, side-street BJs)... none of which you want anyway. Are you desperate to get this Tenant in? Is there background that gives you a nice warm feeling? I'd be wary... I mean... Councils are good reliable payers... but they're certainly not on your side when things go wrong... in this case you have the Council - who will pay, the Tenant - who you hope will pay... and a Guarantor too.

It sounds complicated. Why the need for a Guarantor? What about your Insurance, is it OK for benefits? The clause is probably useful... as it seeks to protect you, the Landlord, from the situation where the Council can claw stuff from you... but whether it's useful in real life would be entirely another question. And if you're dealing with people at the lower end of society, anyway, my own experience is they read nowt, they're just glad to get anywhere that will take them... and then the trouble may start... once they're in... and the Guarantor is uncontactable. Actually, I've not had that experience... as I don't do Guarantors at all.

Just because someone is not proposing to, at the start of the tenancy, for their HB / UC housing element paid direct to the landlord does not mean it would not happen in the future. The clause is seeking a guarantee that the guarantor be liable to the landlord for any overpayment recovered by the local authority.

From the guarantor point of view, I would have problems with the wordings that seems to suggest to me that they have to pay even if the tenant are able and willing to pay the money, rather than only if the tenant fails to do so. Also, nothing in the clause requires the overpayment recovered to be money you would otherwise had been entitled to in the first place. By that I mean, if the rent's £500 per month, but somehow the local authority paid you £900, that would leave £400 that's going to be recovered as overpayment. A simple reading of the clause suggest to me that the guarantor would be liable to pay you the £400 in such example, even though you were never supposed to be paid that in the first place.

From the landlord point of view, I would have problems with the wording "local authority". Universal Credit is paid by the DWP. DWP is not a local authority.

Why would need such a clause explicitly in the guarantor agreement? You have a tenancy agreement that specify what the tenant is liable for, then you have a guarantor agreement that says the guarantor is guaranteeing everything the tenant is liable for in relation to the tenancy.

Keep it simple. Explicitly spelling out what the guarantor is liable for are just going to leave chances for things to be missed out so that some things are guaranteed and some not.