Requesting a Guarantor

Though you need to try as hard as you can to seek out trustworthy and completely secure tenants, it’s not always the case that letting profitable property has to mean letting to A+ credit rated tenants. There are plenty of situations where letting to someone who hasn’t got a completely clean past (or perhaps has no past at all) is economically sound: there wouldn’t be many student lets, social lets or first time properties if landlords weren’t prepared to offer them property.
However, there is a way to ensure double security when letting and that’s to ask for a guarantor.

Defining a Guarantor

A guarantor is anyone who will cover the costs of the tenants if the tenants are, for some reason, unable to pay. Often, landlord insurance policies are obliged to pay out because the tenants have been unable to cover the cost themselves. Asking for a guarantor to sign up as well as your tenant’s means there’s a second chance to recover any damages.

Choosing Wisely

Just like your tenants, your tenants’ guarantors are a part of your risk. It’s possible, remember, that they might fail to pay too. This is unlikely, but you still need to choose wisely: it’s preferable for a tenant to have a parent or even grandparent as a guarantor because they are likely to have greater accumulated wealth than a friend or partner of the same age. It’s a good idea to avoid closed loops, too: flatmates cannot be each other’s guarantors if you want to manage your risk properly.

Legally and Officially

Of course, there is no point nominating a guarantor if you don’t follow through with the legal obligations. It’s wise to talk to a specialist solicitor, but whatever the outcome, ensure your tenants’ guarantors sign the papers before you allow your tenants access to the property. This will probably be time consuming and require posting copies of contracts, but it is vitally important.
Asking your tenants to provide a guarantor isn’t always necessary and it might be problematic for tenants who are older and probably have a reasonable level of assets themselves, but it can be a winning idea. Not only does it spread your risk in the event of a damaging situation, it disincentives your tenants from causing damage in the first place: particularly if they know mum or dad will be forced to pay!