Landlords are generally a cautious bunch – and rightly so. Aside from their main home, the rental properties they own are significant investments and therefore decisions who to rent to are not taken lightly and will always be means tested.
During the recent Covid pandemic, significant protection was offered to tenants in the form of protection from eviction. Many tenants have built up significant arrears and have additional protection from collection of debt via breathing space legislation. This protection was provided whilst all the while landlords were still responsible for maintaining their properties and adhering to the required legislations. Corresponding protection was not afforded to other sectors of society and many landlords feel they had little support – even though they were providing vital accommodation.
Now that we have come out of the worst of the pandemic and have returned to some form of normal – with regards to financial rules of society at least – landlords and other sectors are taking stock of losses and looking at risk mitigation going forwards by modifying the way they do business.
With regards to the process of letting a property, the ability of the applicant to afford the rent – and how to protect against default – is always of primary concern. Not surprisingly therefore, we are now seeing an increased incidence of landlords requiring guarantors for new tenancies. This can be for a variety of reasons, but most commonly it will be due to the income and financial history of the applicant. So, any question marks over affordability – particularly with rents rising, coupled with any historic rent defaults, will be taken into account and will likely result in the need for the applicant to have a guarantor.
From a tenant’s perspective we would always advise that the applicant gets prepared; get your paperwork in order and always consider your ‘financial footprint’, and how you might be viewed when applying for a tenancy. It’s worth exploring whether you can have a guarantor as a back-up if necessary.
There is evidence also, that taking a guarantor is generally becoming common place across a wider segment of the market. We will continue to monitor this and report any trends as they emerge.
