Tenant References and Guarantors
Referencing
Landlords should interview prospective tenants carefully to assist in choosing one who will be trustworthy and reliable. Taking up references from a prospective tenant’s current or previous landlord, employer and bank can help to inform the tenant selection process.
Some landlords might also use a tenant referencing service, which will make checks and enquiries of a prospective tenant on a landlord’s behalf. Many companies provide services such as this. They can be found online or via insurers or landlord associations.
As part of the pre-tenancy referencing/checks, it is suggested landlords ask the successful tenant to provide details of a close family member or friend who can be contacted in an emergency or if the tenant leaves without notice.
In some niche markets, such as letting to students, it isn't easy to obtain references because this will be the first time that a tenant has lived away from home. To offset this risk, some landlords ask for guarantors where a parent or friend guarantees to meet the cost of unpaid rent and damage up to a given threshold if the tenant does not meet this.
Guarantor
A landlord will often request a guarantor if references prove unsatisfactory or if income is low relative to the proposed rental amount.
In addition, many landlords require a guarantor in all cases irrespective of referencing — typically in the student market.
Conditions can be requested that the guarantor meets specific criteria such as a minimum income or are a homeowner who can be proven by a land registry check.
Guarantors would generally be referenced and ID checked the same way as a tenant.
A guarantee agreement can either be a separate document or in a guarantee box within the tenancy agreement.
There must be some form of consideration for any contract to be valid. With a guarantee agreement, there is no service provided in exchange for a fee, and as such, on its face, there is no consideration. However, if the guarantee agreement is signed before the tenancy is entered into and there’s a term explaining the consideration is that a tenancy will be granted to the prospective tenants, that should be sufficient consideration for the guarantee to be a valid contract. Otherwise, the guarantee agreement will need to be made as a deed and witness signatures. To be safe, many landlords make all guarantee agreements as deeds and ensure the signatures are witnessed, which eliminates any worry over whether it was signed before or after the tenancy agreement.
If a renewal is provided to tenants, any guarantee agreement should also be renewed simultaneously.
A guarantee agreement that does not contain any explicit clause expressing that it continues beyond the tenancy fixed term will end upon expiry of the term.
If the tenant defaults in paying the rent or breaches some other obligation of the tenancy, the guarantor can be required to pay. This gives the landlord an alternative means of enforcement of the tenancy agreement.