UK Landlord Forum / Life

Quick one – I'm using an online agent for the first time.
Tenant's contract – no problem, I found one suitable to download (plus I have my old highstreet agent one to chop into).

But, guarantor – I can't find anything suitable to download (and the highstreet agent never used them!)
Could anyone kindly point me in the direction of a legally-binding document I can use for the guarantor?  And are people referencing the guarantor as well?

Sorry, scratch that, found one to download.

Quote from: Chris S on December 02, 2024, 09:38:39 PM...a legally-binding document I can use for the guarantor?

You say you've found one, but I reckon you didn't... the challenge being the "legally-binding" part.

Experienced landlords don' t bother with guarantors. Not only are the contracts not worth the paper they are written on, but I would not want a tenant whose application did not suffice alone. 

Interesting you should say that.  I'm following 'The Landlord's' advice religiously, and that not his opinion – see below.

Situation – I've got a couple, moving 'down South (one already here, has been B'n'B/hotelling mid-week), am confident they will pass all my checks plus those of OpenReach.  Problem – they are not Brit Nationals (have all the Visas etc, and I'll db check this), therefore have no UK-based guarantor.  Easily meet the salary number I'd expect to manage the rent comfortably [both employed by well-known local corporates] combined (2nd alone though would be tight).

Couple two, local to the area, first house together, earn a lot less but can provide a guarantor.  But, slight twinge, he is a 'Personal Trainer' in addition to his main job.  I've asked for his Ltd name so I can check out on Companies' House – but am drawing blanks here.  Am beginning to suspect he does 'cash in hand' roles, so am starting to get just a wee bit nervy.

What couple would you choose...!!

The Landlord's article:
If I Could Offer New Landlords Only One Tip, This Is IT!
Last week I was liaising with someone that is about to start their beautiful journey of purchasing their first Buy-To-Let property. Whilst discussing his acquisition, I was asked, what would be my ONE golden tip for a new landlord?
Good question, although kinda' impractical.
While I don't believe there to be a silver bullet tip, I can almost certainly think of a few golden nuggets which I would offer before others. Essentially, one tip alone in this belligerent industry would be futile.
However, in the interest of being a good sport, I played ball and handed over the one tip I would give before all (with the proviso that he understands that one tip alone is worthless, of course)!
That I got thinking. What do other people think?
So, of course, I summoned the minds of industry experts and asked them to contribute their ONE golden tip, so when combined together it would make for a much more practical set of tips (that was the hope, anyways).
So without further ado, here's my ONE golden tip along aside the experts:
1) Always get a home owning guarantor
Contributor: Adrian Thompson
From: Guild of Residential Landlords
Always get a home owning guarantor. This is normally a family member but it doesn't have to be. I know that many landlords fear about adding a significant time to let a property but I find this to be unfounded. It may add a day or two but nothing more. The amount of rent being charged has far more impact on the length of time a property takes to let.
When a tenant fails to pay the rent or causes damage, there is nothing quite like the ability to go to a third party to claim these amounts. There may well be protests from the guarantor when a demand is made and I don't purport it to be easy but ultimately the chances of getting paid are greatly increased and because they are a homeowner, a charge can be placed against their property.
When taking a guarantor, there are a number of things worthy of note:
•   Ensure all adverts contain the requirement and this is clearly visible. This alone stops most rubbish tenants from even enquiring and there are no surprises for genuine tenants.
•   Always check on the Land Registry On-line that they are in fact a homeowner. This costs ££.00 and is well worth the small fee.
•   Make sure the guarantee agreement is properly drafted and amongst many things, ensure it contains a clause that makes the guarantee continue into any periodic tenancy after the fixed term (otherwise it may end with the fixed term).
•   Make sure the guarantee agreement is made "as a deed" and is witnessed accordingly.
The guarantee agreement should always be signed before the tenancy.

https://www.propertyinvestmentproject.co.uk/blog/tenant-guarantor-form/

The description of the form you've linked to doesn't match the things that are noted as "worthy of note" in the previous post. I think that makes Hippogriff's point for him.

QuoteEnsure all adverts contain the requirement and this is clearly visible. This alone stops most rubbish tenants from even enquiring and there are no surprises for genuine tenants.

Spot on, this one.

QuoteAlways check on the Land Registry On-line that they are in fact a homeowner. This costs £3.00 and is well worth the small fee.

Again, hard to argue, but the land registry is about six to nine months behind at the moment.

QuoteMake sure the guarantee agreement is properly drafted and amongst many things, ensure it contains a clause that makes the guarantee continue into any periodic tenancy after the fixed term (otherwise it may end with the fixed term).

That's best practice, but it's not bulletproof.

QuoteMake sure the guarantee agreement is made "as a deed" and is witnessed accordingly.

That's essential (and is what's missing from the form linked to).

QuoteThe guarantee agreement should always be signed before the tenancy.

I hope this means before the tenancy starts, rather than before the tenancy agreement is signed. Guaranteeing an contract that doesn't exist yet wouldn't be my preference.

Anything that ultimately depends on people behaving honourably should be viewed with suspicion. The mention of " home-  owning"  guarantors implies that a landlord would have something to go after if it came to court. The reality is that even if such claims succeed, they will take months/ years, and the guarantor may make just a couple of payments.

There have been examples on here of guarantors, particularly parents,  trying to weasel their way out of stumping up. It costs nothing to get a guarantor, but if this causes one to give the benefit of the doubt to a dubious applicant, a false sense of security, then I am against them. My couple of experiences in the past - one parent, another step- parent- did not inspire me to do it again. 

The first couple (although granted, I only met one of them; the other still up North), gave me no reason to doubt their integrity.  It's just (from a convenience point), they're not Brit nationals.  Moving within country to a job for a FTSE corporate is perfectly plausible (and of course something I can check out).
I seem to remember from my student & subsequent renting days, nobody ever asked me for a guarantor, though my first company did provide something along those lines (along with the reference).  Lets face it, we all have to start somewhere.
They have decent jobs already.  Everything feels 'ok'.  Only one of them is moving to the 'new' job.  The salary of the other could cover the rent if they flunked their probation.
Maybe I can float the idea of one of those 'guarantor' companies by them.  See how that's received.

That's interesting. I'd say that nowadays students have two choices. Guarantors or up to a year's rent in advance (mostly for overseas students). A student let without either of those feels unlikely (it's not something I do though, so I could be wrong). Student guarantors are usually parents, so the value is different. It's pressure on the tenant that issues will be publicised and on the guarantor to "parent" problems away.

I never used a guarantor agreement or agreed to someone who needed a guarantor. The agreements are almost impossible to enforce and (consequently?) they give a false sense of security to a landlord making a decision. If the figures don't meet your formulas, unless you're taking out rent guarantee* insurance, you're making a decision about your own risk and are a grown up and are allowed to do so. You have to be sure why you're considering doing a stranger a favour maybe.

*Like "guarantor", an ironic / humorous approach to naming.

Thanks, folks.  Further development – they have offered to pay (no mention yet on amounts, no negotiations yet) additional rent upfront.  Which is of course useful from my cashflow perspective – but, I've no intention of coming across as a 'bad' landlord, and don't want to create any bad vibes from the off.

FYI, it's always been my intention regardless to get RGI - (though if there was a 'specialist guarantor' in place as well, not sure how these two things would slug it out for legal liability should the worst happen).

I did send them a link to 'The Landlords' page on guarantors – but they haven't mentioned anything about taking out/desire to take a policy with a specialist company.  I suppose I could ask.

Their reasons for not already having a guarantor are entirely understandable, as far as I'm concerned.

Can I push this one up a bit?

Let's say, hypothetically, you get a UK-based, house owning guarantor for your tenants (as The LandLord seems to think you should), and also as suggested by:

1 - Always get a home owning guarantor
Contributor: Adrian Thompson
From: Guild of Residential Landlords

BUT,

2 - You also have RGI insurance.

(and naturally have already vetted your prospective tenants etc – looks good).

So, of the two scenarios above, assuming the worst happened, legally, (simplistically) which wins?
Many thanks

Most likely the rent insurance starts to pay out while the tenant is still in situ (depending on the policy) and therefore there would be no debt for the guarantor to pay.
I've never used RGI, so that's completely theoretical.