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Parents acting as rental guarantors can end up liable to pay large sums of money in order to protect their children from rental disputes.
For young people, and mainly students, it is now commonplace for landlords to ask for rental guarantors when they are letting a property. This ensures that if the students or young people default on the rent, landlords are able to pursue the guarantor for the sum that is left unpaid.
For landlords, the use of rental guarantors is essential, as it provides an insurance against the loss of rent. However, for parents who are acting as guarantors, it is imperative that they check the tenancy and its terms thoroughly to properly avoid potential pitfalls.
For example, under ‘joint and several’ tenancy agreements, all tenants and their guarantors are equally liable for the obligations of one another under the contract. For example, if a tenant in shared accommodation fails to pay the rent, the other housemates, and therefore the other guarantors who are included in the tenancy agreement are also liable for the rent arrears and can be called upon to pay them if necessary.
This demonstrates the way in which there can be hidden obligations in a tenancy. Parents, and other people who act as guarantors, must thus be aware of these things when they are entering into a contract to ensure that they do not end up liable for the transgressions of others.
Managing director of Only My Share, which provides rent arrears protection for tenants in shared properties, Jeremy Robinson, spoke out about the issue, which is becoming more and more pertinent as landlords begin to worry about financial security.
He said: ‘With rising living costs, students in shared accommodation are increasingly at risk of a housemate defaulting on the rent. This could lead to rent arrears which have to be covered by the other tenants in the property. If parents have become a guarantor in a shared tenancy agreement, they could be left with a massive financial liability running into thousands of pounds.’