Increasing numbers of relatively well-paid tenants are being asked to provide a guarantor.
That’s the view of PropTech firm Goodlord which says that the number of tenants earning £25,000 to £50,000 being asked to provide a guarantor has risen by 58 per cent since 2020, and the number of tenants earning £50,000 to £74,999 being asked to provide a guarantor has risen even more - up 92 per cent since 2020.
The average salary for a full-time employee in Britain in 2022 was £33,000, only a modest rise from the 2020 average of £31,461.
In 2020, just 3.7 per cent of tenants earning salaries of between £25,000 and £49,999 were asked to provide a guarantor by their letting agents or landlord.
However, in 2023 to date, this has risen to an average of 5.84 per cent of all tenants - an increase of 58% per cent compared to 2020 figures.
Goodlord says this means requests for guarantors are now far higher than even at the peak of the pandemic, when hundreds of thousands of renters were placed on furlough or faced an increased chance of redundancy.
In 2023 to date, the average cost of a rental property in England has been £1,099 per property per month, rising to £1,871 per month for properties in London. This is up from an average price of £937 per property per month in 2020. In London, the average price of a property in 2020 was £1,612.
As tenants face these increased rental costs, many are seeing a greater proportion of their take home pay go towards rent. As a result, this means more renters are having to provide the additional security of a guarantor when signing a new tenancy.
Goodlord spokesperson Oli Sherlock says: “The rental market is facing a series of overlapping challenges. We’ve spent years not building enough homes, meaning the supply of rental stock is low. This is being compounded by landlords - who are facing rising costs and ever more complex regulation - selling up and leaving the market.
“This supply and demand problem means rents are rising at a time when tenants have less disposable income thanks to the cost of living crisis. This means more tenants are being asked to show they have the support in place to meet their rental obligations, should they need it. As well as a rise in the number of tenants who find themselves needing to provide a guarantor, we’ve also seen a big increase in landlords taking out rental insurance.
“It’s a far from ideal situation for either tenants or landlords. The Government should see this as an additional sign that more support for the rental market is urgently needed.”
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The more you increase risk on the sector through left-wing ideology, the more the asset OWNER will protect themselves. Nothing to see here.
I’d imagine it has more to do with winning votes from 12 mill tenants & laying the foundations for Build to Rent.
Tenant Fees Bill came out just before May got elected and guess when the Rental Reform will be ready…
A few hundred B2R corporates are easier to govern than 2 million landlords also. Rental property would then join the long list of services which have gone down this route, will property fare any better than health, water & rail?)
Nothing to do with the extra costs involved with the additional referencing imposed by referencing companies.. just shows you how inapt these referencing agencies are, what a joke...
I always take out rent and legal expenses insurance on the basis that if they won’t insure the applicants, why should I trust them with my assets.
Swapping around what you've said - if the insurance company is willing to trust them then that's certainly a good sign... HOWEVER their criteria are usually so stringent that a lot of perfectly good applicants wouldn't be accepted so if you *only* accepted people who you could insure you might be struggling to find anyone and end up with big (and expensive) voids...
Ideally I'd rather earn rent (as long as the tenant paid and also looked after our property) then be ripped off for c/tax on an empty property. Therefore better to accept trustworthy, but not necessarily perfectly creditworthy, tenants if they have a good guarantor - or better still TWO guarantors (which we often ask for, but only credit check one of them).
Applying your logic to *guarantors* instead of insurance companies works well, i.e. if they can't find a respectable and creditworthy person who knows them well and is still willing to trust them enough to be their guarantor then why should I/we trust them!
Barry, not had a problem with “stringent” applicants being rejected.
Well you're lucky... maybe you have posher properties or better quality applicants/tenants (at least in terms of finance/credit status) than us?
Most of our tenancies last well over 2 years, typically 3 - 4 years but quite a few of them much longer... e.g. 5 - 6 years is quote common, and these days we get extremely few (usually no) rental defaults from any of our tenancies and very little - probably negligible - damage over and above fair wear and tear.
We used to have more rental defaults and quite often had to chase, and sometimes evict, tenants but gradually realised it was in the poorer quality properties - which we sold long ago.
It's been a few years since we last tried taking out rent protection insurance... it was poor value for money, we thought, because looking at our tenancies over the last couple of years (at the time) we would never have needed to make a claim and so only paid non-refundable premiums. Looking at our tenancies over the last 10 years (say) we might have made - or tried to make - one or two small claims and over the last 15 years those one or two small claims plus one much bigger claim... however, given what we did instead in each of those cases the rental insurance would have proven poor value for money (especially after taking excesses into account and also the hidden cost of all the admin involved in making and dealing with a claim) and so - if it had been available for all of our tenancies - resulted in a net loss.
However, when in the past we did try to get quotes for cover most of our applicants wouldn't have been accepted even though we thought them perfectly respectable and have gone ahead with tenancies with them (supported by suitable guarantors) that have worked out just fine.
, and we anyhow have fairly comprehensive legal cover with our corporate block buildings policy - which isn't as grand as it might sound - as well as with more normal landlords buildings policies for one or two other properties we have that for various reasons are not on our main corporate policy (we think it unlikely that we'd ever need to make a claim for legal expenses and if we did we'd probably prefer to retain control by making and paying for our own instruction).
"maybe you have posher properties or better quality applicants/tenants " - both?
Actually my tenants tend to stay for at least two years only leaving when employment forces a move. The longest was six years.
MY experience is that references are really financial. That fraudsters can give good references. One tenants guarantor was her mother who has died. A disproportionate number of tenant applicants were con artists One was a very presentable Afro Carribbean lady who represented corporate clients, sounded great but in the end they didn't actually have any clients or even any capital ,financial history etc.
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