May 2024
Read Time: 3 Minutes
A guarantor can play a significant role for first-home renters. Securing a rental property can be difficult for renters who do not have an established credit or rental history. We look at the role of guarantors and what taking on this responsibility entails.
In relation to the rental market, a guarantor is a person who "guarantees" someone else's rental contract. A guarantor is nominated by the tenant and their details are added to the tenancy agreement.
A guarantor is accountable for covering rent, property damage expenses, and any other rental obligations that a tenant cannot fulfil.
If you don't have an established credit or rental history a guarantor can act as a financial backup, giving peace of mind to potential landlords. Landlords are more likely to take you on knowing you have a guarantor, as it reduces the risk of you defaulting on rent. Landlords may also require a guarantor if your income does not meet their rental criteria.
Sometimes good tenants have limited rental experience. Adding a guarantor increases the likelihood of landlords accepting first-time renters.
First-time renters may find it difficult to find a rental property even with a good credit history as they lack references from previous landlords. Having a guarantor may make your property search easier, as landlords can rest assured that they are covered if their property is damaged.
A guarantor is often a parent or guardian but can be anyone aged 18 or over. A guarantor will need to demonstrate their financial stability, which may involve providing proof of income, assets, and a good credit record.
By agreeing to be a guarantor you assume responsibility for the lease terms alongside the tenant. This includes paying rent, covering damages and adhering to all the terms outlined in the rental contract.
If you are someone else's guarantor, you will be liable if that person misses a rent payment or causes damage they can't or won’t pay for.
As becoming a guarantor can involve a high level of risk you should consider whether you can afford to make repayments or cover damage before agreeing to take on this role. Consider how likely it is that the person you are guaranteeing will default - if they have a poor credit history it may be better to opt out.
Yes, as it is a big responsibility it is a good idea to access independent legal advice before agreeing to be a guarantor.
Once you have secured your tenancy, take a look at our helpful articles on The Importance of a Flatmate Agreement for Tenants, Rental Property Insurance for Tenants and Who is Responsible for Maintenance and Repairs in a Rental Property?
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