Rent Affordability, Guarantor and vettings

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    Rent Affordability, Guarantor and vettings

    A married couple age 60 is interested in renting my property. They have both lived in her mum's home and only pays bills and not rent.
    I wanted to know for:

    1/ rent affordability should it be 'monthly rent + bills' x 3 equates to their minimum combined gross annual earnings?
    2/as it seems their rent affordability is 2x 'monthly rent + bills', they had offered to use their son in law to be a guarantor for both of them.
    I have read some of the posts regarding guarantor and it is not as straight forward as it seems.
    I am going to use my Agreement as it is but include Guarantor signature and date.. and have an additonal page to say what is the obligiation of the Guarantor - will this suffice?
    Would it be sufficient to the vetting and credit checks on this gurantor or should it also be done on the 'couple'
    3/ Vetting I was thinking of using Experian Credit Report 30 day trial.. what company do other people use?

    #2
    Your asset, your prospective Ts, your risk
    Have you had your proposed AST checked by a qualified property Solicitor?
    I think it is illegal (DPA) to obtain a Credit Ref without subjects authorisation.
    Just ask G if he owns property where he lives and check LR, so you can put a 'charge' on it if reqd.

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      #3
      I have asked a 'qualified property Solicitor' to read through my TA with guarantor. The fee was £600 + VAT I am stating the fee as it was not a good experience but I have paid for their service as they were suppose to be professionals
      I have prospective tenants' permission to do Credit checks and I wanted to see what other reputable credit reference there are for landlords not using a letting agent.

      Comment


        #4
        A married couple in their 60s with 2x rent as income sound OK (although it depends where in the country you are).
        In London, many tenants are paying 70-75 of salary in rent.

        You won't get the kind of credit check that you can get on yourself (via a 30 day trial for example), that's far more detailed than you should need.
        You'll get a number (experian would be 1-999) and probably a recommendation - "rent", "guarantor suggested".

        The issue with people in their 60s is likely to be a change when they retire to pension and housing benefit.
        However, you are not able to discriminate because of age.

        Guarantors are a complete pain and should be avoided if possible.

        If you do procede...
        You don't want to include the guarantor agreement in the tenancy agreement, it needs to be a deed and the TA isn't going to be a deed.
        The TA is between the landlord and tenant(s) and the guarantor deed is a separate agreement between the landlord and guarantor.
        Any deed of guarantee should be reviewed by the guarantor with a copy of the tenancy agreement being guaranteed and the guarantor must be urged to take professional legal advice.
        Most professional advice is likely to be "your committing to a lot for nothing in return".
        It is unlikely that a guarantee deed will last "forever" while the tenancy can roll on for years.
        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).

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          #5
          Arent you a member of one of the landlord associations? They provide many of these sevices free or at low cost.

          Comment


            #6
            jpkeates - very helpful. Good to know salary is 2x rent is ok.
            I have declined a lot of potential tenant as they were only 2.4% x rent.
            Good tips about guarantor (G) criteria - not needed as G they are renting.
            60s - interesting their story changed of why they are moving (but I think the story is ok) I have asked the questions but what does that guarantee.
            I will do the 30 day trial (as I have done before). I still prefer to do own checks as I have a peace of mind and get a feel of the potential TT.

            Comment


              #7
              You should set your affordability criteria as you see fit, it's different in different parts of the country and different types of property.
              If I applied my (West Midlands) criteria in London, I'd have no customers.
              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
                The income multiple is often driven by insurance and mortgage criteria as a measure of low risk tenancies. I would check to see if either of these apply....quite a few of the referencing agencies the letting agents use will work for the consumer directly...e.g. Homelet / legal4landlords/ MARAS etc. for a small fee (incl. options for verifying income/credit searching). These companies will also offer rent and legal protection for a fee if they have referenced a tenant and/or guarantor. You can obtain suitable agreements via websites like ARLA, RLA as downloads you can pay for. The point is if you have doubts but want to proceed anyway protect yourself.

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                  #9
                  Dathena - good point - I will check them out.. I was looking at Rent4sure as referencing agency..

                  Comment

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