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Information for guarantors
Pros and cons of being a guarantor
People often agree to act as guarantors to enable a relative or a friend to rent a home. If nothing goes wrong, then it might be that you sign up as guarantor, and never hear from the landlord again.But sometimes a relative or friend might not be able to pay their rent or meet other tenancy obligations. If things do go wrong, guarantors are sometimes surprised to find that a landlord can ask them to honour the guarantee and even take court action against them if they fail to pay what is due.
If you find yourself in this situation, you can, in theory, ask the tenant(s) to repay you and, if necessary, take court action against them if they don’t. However, in practice, there are many reasons why you may choose not to pursue the tenant(s) – not least because you may not want to add to their problems.
It’s important to know that being a guarantor is a big responsibility and there are real risks attached which you need to understand before you sign anything. And you may decide it’s not something you can do.
You need to think about the person asking you to be their guarantor and decide how confident you are that they (and any co-tenants) are reliable and will behave responsibly. Can you rely on them to pay the rent and keep the property in good condition?
This is one of a series of four short guides aimed at young people and students providing information about guarantors. The other three in this series are:
What is a guarantor responsible for?
The extent of your legal responsibility (the law calls this ‘liability’) will depend on the wording of the guarantee.
The terms of the guarantee may be written down in a separate agreement or included in a section of the tenancy agreement itself. Sometimes there may just be a short clause in the tenancy agreement with a separate form for you to fill in giving your personal and bank details. If there is only very limited or no information about what you are responsible for, you should ask the landlord or their agent to provide you with more.
It’s very important that you read the guarantee carefully to ensure that you understand what you are signing up to. If you're guaranteeing more than just unpaid rent, then you must read the tenancy agreement as well so you know what else you are guaranteeing.
If there’s anything in either document that you don’t understand, you should get independent legal advice. You may be able to get legal advice:
- as one of the benefits of your home or car insurance. Check your policy documents to see if this applies to you. Many insurance policies provide access to free legal advice about the law in England and Wales, for example, via a telephone helpline.
- as one of the benefits of trade union membership. If you are a member of a trades union, contact them to find out where you may be able to get free or low cost legal advice.
- from your local advice centre or Law Centre. See Advcenow’s Help Directory for more information about where to go for legal advice.
You are potentially responsible for any rent money owed (you may hear this called ‘arrears’), the cost of putting right any damage to the property and any other costs that the tenancy agreement allows the landlord to charge the tenants as a result of them not complying with the tenancy agreement in some way.
If the tenant you’re guaranteeing shares the tenancy, for example, with friends or fellow students, the guarantee will probably make you liable for all the rent, not just their individual share. You may also be responsible for any damage caused by any one of the tenants, not just the one you’re wanting to help. This may not be what you expected and why it's important that you understand the terms of the guarantee before you agree to them.
When does a guarantor’s legal responsibility start?
This depends on the wording of the guarantee.
If your relative or friend is sharing with co-tenants and they each have a guarantor as well, make sure the guarantee makes it clear that you will only become bound by the guarantee from the point when all the co-guarantors have signed up to the guarantees. Otherwise, if you’re the first one to sign, you could end up being responsible, on your own, for all the debts owed by any of the tenants to the landlord.
However, even if you do make sure that the other guarantors have signed up, there is still the possibility that your co-guarantors may 'disappear'. A landlord does not have to take action against all the guarantors but can choose to pursue the guarantor(s) that are most likely to pay up. So, even if there are other guarantors, you may find yourself liable for the full amount of any debt.
When does a guarantor’s legal responsibility end?
Again, this depends on the wording of the guarantee. You may, for example, continue to be responsible for however long the tenancy lasts and for any rent increases. If this is the case, you will be legally responsible if the tenant breaks any of the promises they made in their tenancy agreement before the tenancy ends and will remain liable for a period of six years from the date they break their promise. So, for example, if the tenant fails to pay the last month’s rent, the landlord has 6 years from the date that the rent became due to take action against you and/or the tenant.
Unless the guarantee provisions say otherwise, you carry on being liable even if you fall ill or lose your job.
If the tenant is declared bankrupt, the extent of your liability will depend on the wording of the guarantee. If you are declared bankrupt, then depending on the circumstances, the landlord may be a creditor in the bankruptcy for anything you owe. And if you were to die, the landlord may be able to claim against your estate but, again, this will depend on the particular circumstances.
Asking for changes to the guarantee provisions
If some of the guarantee provisions seem unfair to you, you or the tenant could ask the landlord to agree to change the guarantee before you sign it.
For example, you may want to ask for changes that limit your responsibility, so that:
- The guarantee only applies for a set period of time, for example, 6 months or a year. In this situation it’s best if the provisions set out both a start and end date for your responsibilities.
- You are only liable for any debt owed divided by the number of tenants sharing the property. So, for example, in a situation where the tenant is sharing with 3 others, the guarantee only extends to 25% of the rent for any one month.
However, many landlords aren’t willing to limit a guarantor’s liability. So they may not agree. But it's probably worth asking.
This guide was written and produced by Advicenow thanks to funding from the TDS Charitable Foundation.
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Very useful thank you
My concern is whether as a guarantor I might be liable for any legal costs the landlord incurs and compensation for a void after the guaranteed tenants have left.
Very helpful start in considering the issues as how best to support family.