In a tenancy agreement, the tenant is obligated to pay rent periodically as agreed with the landlord. On the other hand, the landlord also has obligations towards the tenant.
Much like in guarantor loans bad credit where a guarantor is required to get the borrower approved for a loan facility, the creditworthiness of a tenant may not be sufficient for them to be accepted by the landlord hence the need for a guarantor.
The guarantor agrees to take up any rent arrears or damages to the property if the tenant is unable to cover them.
Who Can be a Tenant Guarantor?
Any person including a family member or friends can be a tenant guarantor. These guarantors agree to vouch for the tenant in addition to accepting liabilities on their behalf.
The landlord reserves the right to vet the guarantors for suitability. Where a guarantor has been turned away, the onus is on the tenant to look for another guarantor else their tenancy may not be approved. Guarantors who have failed credit checks or are on low incomes may be rejected by the landlord.
Guarantors must be in a financial position to take up any losses without struggling to repay.
Understanding a Tenant Guarantor Form
The guarantor form is a legal piece of insurance designed to protect landlords just in case of damages and rent loss. Once the parties sign the form, it becomes binding and enforceable. The tenant guarantor is not a stand-alone document but rather a supplement to the tenancy agreement.
The Different Sections of a Guarantor Form
Guarantor forms are designed differently but there are basic sections that are a must-know to anyone signing the form. Part of the information contained in this form include:
- Date – The form becomes effective from the date it was signed. It is important to know the dates because some contracts start counting from the day they were drawn and now when they were signed.
- Guarantor – The name of the tenant guarantor appears on this slot.
- Landlord – The name of the landlord is also included on the guarantor form
- Tenant – This is the person who seeks to rent the property
- Property – The address of the property is included on the guarantor form so that it is clear to both the guarantor and the landlord.
- Tenancy Period – This is the duration of the tenancy. Some tenancies have a minimum threshold of about 3 to 5 years.
- Rent – This is monies worth that you pay the landlord
- Guarantee Terms – These are the conditions under which the guarantee is agreed.
- Guarantor’s Obligations – As a guarantor, you must consent to a list of obligations including the agreement to pay the rent due if the tenant fails to pay.
- Signatures – The guarantor appends his signature on the form preferably before a witness.
How to Find a Suitable Guarantor
Much like finding a suitable tenant, finding a suitable guarantor is equally important. One thing to bear in mind is that a guarantor, however suitable they are, should never take the place of an unsuitable tenant. Both must meet every criterion that you have laid out for your tenancy preferences.
Ensure that the guarantor has assets or a job that will enable them to cover any outstanding costs the tenant is unable to repay. If possible, the guarantor should be a UK homeowner.
You can use reference tools and services to assess the suitability of a guarantor. Some tools will give you a speedy reference service while others offer comprehensive referencing at a fee. Some of the details these tools look at include:
- Credit checks
- Identity and fraud information
- Bankruptcy data
- Alias name search
- Electoral roll check
- Affordability rating
- Previous landlord reference
- Employer’s reference
- Right to rent checks
In the event the guarantor doesn’t pass the test, the landlord should ask the tenant to get someone else to be their guarantor.
Is it a Tenant Guarantor Form a Legal Requirement?
Not every landlord requires tenants to have a guarantor. A landlord can enter into a legally binding tenancy without there being a tenant guarantor form. However, as good practice, the tenant should bring along a guarantor. This will give the landlord extra security and the tenant would be more incentivized to pay their bills.
The landlord should make it mandatory for the tenant to have a guarantor if their credit score is low or their income is in the lower bracket. Students or young people can have their parents guarantee them because most of them have no credit history.
What are the Different Types of Tenant Guarantees?
There are two types of guarantees. The first type is where the guarantor clauses are included in the tenancy agreement form. The landlord, tenant, and guarantor all sign the tenancy agreement.
The second type of guarantee is known as a deed of guarantee. This is a separate contract much like the tenancy agreement. It specifies the guarantor’s obligations some of which include:
- Indemnification against loss of rent or damage to property
- Joint and several liabilities where the guarantor is liable not just for one tenant but also for the rest of the tenants in case of joint tenancy
- Passing of liability to the estate of the guarantor in case the guarantor dies while the agreement is still in force.
Conclusion
Once the guarantor signs the tenant guarantor form, they should be left with a copy and also a copy of the tenancy agreement. In this way, they will be clear about the liabilities and obligations they are required to perform.