New Tenant - Guarantor reliability?

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    New Tenant - Guarantor reliability?

    Hi,

    My tenant has just handed his notice in and will be moving out at the end of May. The flat went onto the market a few days ago and within a day I had a new tenant offer. The propsective tenants are a young couple, one is a medical student with no earnings, the other a manager earning £30k. The parents of one of the couple would both be guarantors and agree to their earnings being shown etc.

    From my estimate they won't have too much spending money after they pay their bills, so it would be tight for them even in normal times.

    An extra issue is that I have no landlord insurance and I don't think I can get any at the moment.

    My question is if the tenants decide not to pay, say because of the new tenants rights under Covid-19, just how easy is it to get money from the guarantors? Is the law on my side, would it be a nightmare if the guarantors decided to be difficult? What I wouldn't want to do is to stump up legal costs because of no insurance....



    #2
    Like most things in life, if they don't pay, the only thing you can do is take it to court, and let a judge decide. Then you might find all is not right with the paper work. Mind you, £30,000 income seems a decent amount to me!!

    Comment


      #3
      Originally posted by alexmclaren View Post
      ...An extra issue is that I have no landlord insurance and I don't think I can get any at the moment.

      ...
      Hope you're just referring to rent guarantee insurance! You MUST have cover for buildings etc etc as a landlord or if the place burns down you'll be liable, no payout, and tenants suing you!

      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        How successful you are getting money from the guarantor depends very much on the guarantee agreement you have in place. Many are not worth the paper they are written on. Then, of course, as amazondean says, you have to take it through our (non-existent) court system.

        There is a free guarantor form available here, but I can not vouch for it's validity https://www.landlordzone.co.uk/docum...-c3c462bd-814b

        Comment


          #5
          Yes Artfull, I do have LL insurance.

          AmazonDean, my rent is £1200pcm so 2 people living off that isn't a huge amount after bills.

          So Snorkerz, from what you're saying then, it sounds like it may be a legal nightmare if they don't pay. I was under the nieve impression that if there was a guarantor then collecting money in the event the tenants don't pay would be very straightforward and would just go straight into my account in place of the tenants money. So how do you make sure you get a good guarantor agreement? Surely there must be a really good one that can just be duplicated?!

          Comment


            #6
            Originally posted by alexmclaren View Post
            from what you're saying then, it sounds like it may be a legal nightmare if they don't pay. I was under the nieve impression that if there was a guarantor then collecting money in the event the tenants don't pay would be very straightforward and would just go straight into my account in place of the tenants money. So how do you make sure you get a good guarantor agreement? Surely there must be a really good one that can just be duplicated?!
            No, the problems (legally) are multi-fold. Firstly, the courts often feel that a guarantee with an unlimited length and/or value is unfair, as the 'contract' can not be ended by the guarantor, it is the tenant or landlord with that control.

            Also, a 'contract' needs a service to be provided in exchange for something (usually money) - but in this instance you are not giving the guarantor anything for his services, you are giving the tenant the benefit. This can be got round by using a 'deed' instead of a 'contract', but the wording has to be so 'right'.

            Ensure the guarantor has plenty of time to read not just the guarantee document but also the tenancy agreement (as this is what the liability is based on). The deed must include the words "executed as a deed" and it needs to be witnessed.

            Comment


              #7
              There's a guarantor agreement here - https://forums.landlordzone.co.uk/fo...or-discussion=
              And there's a sticky thread about it and the issues arising on the main page of this forum.

              I think that guarantors are only useful to apply pressure on tenants to pay, unless the tenants are very young (including students).
              If the reality is that the guarantors are really helping out in paying the rent, it might be better to add them as tenants.

              When deciding whether to rent to people, I don't consider the existence of a guarantor as any kind of positive.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                If the "guarantor" is a family member, then add them as a joint tenant.

                Then no guarantor agreement (of unknown legal standing) is required.

                You can pursue them in the same way as any other tenant should rent not be paid.

                Comment


                  #9
                  Originally posted by jpkeates View Post

                  I think that guarantors are only useful to apply pressure on tenants to pay, unless the tenants are very young (including students).
                  If the reality is that the guarantors are really helping out in paying the rent, it might be better to add them as tenants.
                  Wouldn't this create other problems? If a Guarantor was added to the tenancy agreement, that would give him/her rights to actually live at the property etc?

                  Comment


                    #10
                    Originally posted by alexmclaren View Post
                    Hi,

                    My tenant has just handed his notice in and will be moving out at the end of May.
                    Do you know the reason why your tenant is moving out? If your tenant is buying a property and hasn't actually exchanged contracts yet, things might not go to plan. I have read a few pieces on-line indicating that Solicitors are being advised to halt Exchanges for the moment. To me it doesn't sound enforceable legally yet, but who knows what is round the corner at the moment.

                    I have a tenant who believes she will Exchange and Complete on 6th April (there is no chain in her purchase and her family are taking care of her removals) - if it does happen, frustrating for me as the place will sit empty. I am respecting the 'don't go out unless absolutely essential'.

                    Comment


                      #11
                      Originally posted by Claymore View Post
                      Wouldn't this create other problems? If a Guarantor was added to the tenancy agreement, that would give him/her rights to actually live at the property etc?
                      If thats actually a problem, yes it would give them that right.
                      I think it's only a solution is the guarantor is helping the tenant to pay the rent - because that's better than them being a guarantor, which seems to me to be an agreement what's next to impossible to enforce if the guarantor is really determined not to pay anything.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        Originally posted by Claymore View Post

                        Wouldn't this create other problems? If a Guarantor was added to the tenancy agreement, that would give him/her rights to actually live at the property etc?
                        Right: yes.
                        Obligation: no.
                        And T could exclude them and that would be between T and G and not a problem of the LL.

                        If G is a homeowner, then why would they want to live there?

                        It comes down to the relationship between T and G.

                        Comment


                          #13
                          OP, why state you have not got required LL insurance if you have?

                          Comment


                            #14
                            Originally posted by mariner View Post
                            OP, why state you have not got required LL insurance if you have?
                            I think the OP means he hasn't got guaranteed rent insurance!

                            Comment


                              #15
                              Originally posted by Claymore View Post

                              Wouldn't this create other problems? If a Guarantor was added to the tenancy agreement, that would give him/her rights to actually live at the property etc?
                              I think the problem is not so much that, but that if the occupying tenant's circumstances change and he needs state benefits he may be denied them on the basis that the non-occupying tenant can afford the rent. Whilst the non-occupying tenant will remain liable a source for paying the rent is cut off which rather goes against the whole idea of a guarantee.

                              Comment

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