Concerns have been raised to landlords and letting agents that using a family member as a guarantor could be an unreliable strategy, following Britain’s decision to leave the EU.
Family members are often used to guarantee rent payments for tenants. The purpose of a rent guarantor is to assure the landlord that rent payments will be paid should the tenant default on rent. However, economic uncertainty relating to the Brexit vote has led to household debt soaring. Housing Hand, an insured guarantor service in the UK for students and working professionals, has thus spoken out to say that those with a high level of debt, such as homeowners, may not be entirely reliable guarantors.
Acting head of corporate services at Kinleigh Folkard & Hayward (KFH), Sherard James, extended this view. He explained: ‘We have many international students and overseas professionals applying for our properties. However, a large proportion of these applicants are unable to supply a UK rent guarantor. Usually, if a student is unable to provide a UK guarantor, an advance of an additional six months’ rent is usually required to secure the property. This can be problematic, as many tenants cannot afford such a large upfront sum.’
This problem can slow down the process of securing a tenancy, leading to uncertainty for both the students in question and the firm itself. In order to resolve this, KFH have created a partnership with Housing Hand, who are able to act as their UK rent guarantor to allow the tenancy to proceed.
James continued: ‘Thanks to our partnership with Housing Hand, we have been able to offer a solution with Housing Hand acting as their UK rent guarantor. Our landlords are happy, as we now have a larger selection of tenants to offer them and the tenants are happy as they can afford to rent. It costs the tenants a minimal fee and landlords benefit from guaranteed monthly rent, for the duration of the tenancy.’
The solution, whilst unconventional, means that landlords are protected against the potential rent loss that could come from the use of an unreliable guarantor, whilst tenants are able to get their tenancy started with minimal stress.