Tenancy Guarantor Forms and Guidance for Landlords
As a landlord, there may be times when you need a tenant to name a guarantor. This will ensure you still receive your rent payments even if the tenant runs into financial difficulties.
We know that navigating the world of tenancy agreements with guarantors can be difficult, especially if you're a new landlord or have never needed to ask for a guarantor in the past.
To help support you, the NRLA has produced a number of pre-tenancy resources that will assist you with the process of signing up a guarantor. This includes rent guarantor form templates that you can use to ensure your contract with the guarantor is legally binding and that no details are overlooked.
Join the NRLA today for unlimited access to resources, guides, templates, and advice that will support you throughout your tenancy and beyond.
What is a guarantor?
A guarantor is someone who agrees to pay the rent or damages relating to a tenancy if the tenant is unable to pay. Normally they will be a family member or close personal friend of the tenant. Typically they will also be a homeowner in the UK.
In most tenancies, the guarantor will not be necessary as most tenants pay their rent on time and leave the property in a good state when they leave. However, by securing a guarantor, landlords can have peace of mind that if their tenant does breach their obligations they will be able to recoup their losses later on.
In what circumstances should you ask for a guarantor?
As a landlord, you're well within your rights to ask a tenant to name a guarantor if you feel extra security is necessary.
You might consider asking for a guarantor if the tenant:
- Does not have regular work (if they're a student, for example)
- Is unemployed or on a low income
- Has never rented before and therefore has no references
- Has little credit history (if they're young or have just moved to the UK, for example)
- Has a poor credit history
Who can be a guarantor?
Anyone can be a guarantor as long as they're in stable long-term employment and are a UK homeowner. Because there's such a high level of trust involved, tenants will usually choose a close relative or friend to be their guarantor.
As a landlord, you'll need to carry out a background check on the guarantor in the same way you would reference your tenants. That means credit searches, as well as asking for the following on the application form:
- ID and personal details
- Legal history
- Employment history
- Current and previous addresses
- Character references (from an accountant or lawyer)
- Bank references
- Consent for you to do a credit search
- Signature
What exactly is a guarantor responsible for?
This depends on the terms of the agreement. The guarantor agreement needs to be clear about the guarantor's responsibilities and obligations. For example:
- Is the guarantor only liable for unpaid rent, or can they also be held responsible in situations such as property damage?
- In shared accommodation, does one guarantor cover the whole tenancy, or are there separate guarantors for each share of the rent?
- Does the guarantor agreement last only until the end of the initial tenancy period, or does it extend to future terms as well?
- Will the guarantor be liable for changes to the tenancy agreement such as rent increases?
Getting the wording correct on a guarantor lease agreement is crucial. It is a legal contract that the courts will strictly enforce according to how it is worded. For this reason, it's strongly recommended that you use a guarantors form template to ensure no details are overlooked.
All NRLA members have access to guarantor tenancy agreement templates, giving landlords peace of mind that the guarantor is legally bound to the terms of the agreement.
What is included in a guarantor agreement?
Although there is no statutory document or format for a guarantor agreement, the agreement should clearly set out what the guarantor will be responsible for paying.
A guarantor agreement should also include:
- The date of the agreement
- The lease term the agreement applies to (and how the guarantor's obligations end)
- The names and signatures of the guarantor and the landlord
- The tenant's name
- The property details
The guarantor's responsibilities and obligations need to be laid out clearly in the document. Otherwise, there's a risk that the agreement won't hold up in a court of law.
The agreement shouldn't include any terms that create a 'significant imbalance' between the parties involved, as the courts may view that as unfair. If a guarantor thinks a term is unfair and decides to take you to court, it will be up to the court to decide whether the guarantor has to pay.
It's best practice for the guarantor document to be separate from the assured shorthold tenancy agreement. It must be signed before the tenancy agreement is entered into, with a witness present to ensure the guarantor's signature is legitimate.
Access all the guarantor resources you need with the NRLA
Guarantor documents don't need to be lengthy, but it is crucial that you get them right. Using the NRLA's guarantor tenancy agreement templates will save you lots of time and effort and give you peace of mind that your agreement will hold up in court should you ever need to rely on it.
To ensure the guarantor is legally bound to guarantee the terms of the tenancy, the NRLA provides two separate deeds of guarantee, depending on how much of the rent the guarantor will be guaranteeing.
Join the NRLA today to access guarantor agreement templates and a wide range of other exclusive landlord resources.