Table of contents
Introduction
The UK rental market in 2022
The renter has no credit file
The renter has moved from abroad
The renter is a student
No access to a guarantor
The renter is self-employed or has a lack of regular income
Renting in London
Guarantors for shared accommodation
Guarantor for apartments
How long does a guarantor agreement last?
It's not easy renting in the UK. Many people are asked to pay up to 12 months rent up front if they don't reach the right referencing criteria.
We've seen a 233.9% increase in people needing our services this year so far. These people include students, employed professionals, internationals, expats, and those on benefits. This article will deep dive into the reasons why these people may need a guarantor to secure their property.
The UK rental market
The pandemic, the cost-of-living crisis and an overspill effect from the stamp duty holiday last year has meant that the UK rental market in 2022 is currently very demand-rich. With rental competition increasing, coupled with new regulation proposals that will affect renters and landlords, one thing remains clear as we reach the peak of summer in 2022: the UK sector is highly active.
However, the sector still relies on archaic, unfair existing processes and screening companies, and this coupled with increasing competition across the rental property space and a shifting mobile economy is creating a barrier to renters seeking a fair opportunity.
There are a number of ways in which honest, fair renters are being discriminated against and this can have a widespread impact on individuals and society as a whole – it creates an exclusive, challenging rental market that favours some and not all. This is forcing many renters into alternate living situations which can impact their wellbeing and create hardship.
Unfortunately for renters, these barriers are all interconnected which makes for a very difficult field to navigate, signifying just how deep-rooted these issues are. This means having a rental guarantor is more important than ever.
Here are the top five reasons people may need a guarantor for rent in the UK:
1. The renter has no credit file
Requiring a credit file when applying for a house, rental property, car or loan has been the norm for decades now. And while leveraged by insurers, financiers and other institutions with positive intentions – to assess and make a judgement on risk – only looking at a credit score when assessing a renter provides a narrow representation of that person.
The existing credit framework in the UK does not recognise international credit scores, meaning when people move to the UK from abroad, they are starting their credit history from scratch. For renters, this has an enormous impact on their ability to apply for a rental property, as ‘on paper’, they do not tick the biggest and most important box. Meaning having a rent guarantor is essential.
Poor UK credit files
Similarly, If you have a bad credit score this may stop some landlords renting to you. However, there are ways around this. For example, our referencing technology goes beyond just credit ratings to gauge individuals real credit worthiness and giving more opportunities to rent. We use a blend of open banking data, behavioural analysis and human intelligence to assess the true risk of a potential tentant... painting a much more accurate picture.
2. The renter has recently moved to the UK from abroad
Travelling to the UK for the first time - to study or work - is a daunting task. What makes this worse is you’d probably need a UK guarantor to back up your rent. This is difficult when the majority of family and friends live abroad. This is one of the fundamental reasons professional guarantor companies exist AND why Homeppl's advanced tenant referencing technology is so important in securing a guarantor. Let us explain...
When someone moves to the UK for the first time their credit history starts back at square one. Additionally, if the consumer has rented in other jurisdictions previously, the documentation requirements are unlikely to meet the same standards traditional referencing companies require, some consumers may not even be able to have their documentation presented in English and will be required to pay to have these translated and verified.
Another complexity that’s added to this is that when someone moves to the UK, often they may not have their employment arrangements finalised, making it difficult for them to gain an employment reference or show evidence of reliable income to meet the requirements of agencies.
Often, consumers are required to prove to the government that they have held a certain amount of savings for a set period of time to get a UK Visa. This is where new age fraud technologies add immense value to the screening process, as it proves the renter has real data, a real account, real finances and can actually meet their financial obligations.
Where newcomers move to the UK without this information, or if they do not meet the financial requirements, they are even more disadvantaged by the system, which is why modern, inclusive financial solutions should be more available so that renters can establish their lives safely and securely.
3. The renter is a student
If the renter is a student with no intention of seeking employment, they will have even less documentation to support their rental application, meaning a student rent guarantor is essential.
And while student loans and grants will show affordability, if those have not yet been applied for or approved, it can be difficult for them to meet the requirements of traditional screening companies who favour renters with full credit histories, employment records and more.
Plus, international students bank accounts are registered overseas so can't be used as a reference by the majority of agents. This makes moving country and finding a new home really hard work. This means they will probably need a guarantor to back them up. However, sometimes these are difficult to find due to a variety of reasons, that’s another why rent guarantor companies like us exist.
4. The person has no access to a guarantor for rent
If the renter does not meet the credit requirements, or if they do not have a credit history in the UK at all, they have the option to incorporate a guarantor in their rental contract, making it a legally binding solution. This framework is designed to provide another layer of financial security to the landlord should the renter be deemed risky, but it also ensures the guarantor is held accountable and is financially liable if anything goes wrong.
However, guarantors have to reside in the UK, which poses a variety of challenges to international students or people moving here. Equally, it’s not uncommon that renters are rejected if their guarantor is retired or does not own a property, meaning the system is yet again designed for renters with financial security from within the UK. That’s why professional guarantors offer an alternative when these options are not available to a renter.
5. The renter is self-employed or does not have regular income
People who are self-employed or do not have regular income – as they may work casually or operate in a project context – can be deemed as risky by landlords and agencies as their financial position is considered unpredictable and may create issues with paying rent. However, this blanket notion does not apply to all self-employed renters who – like many others – are simply looking to live securely.
Many self-employed renters or those with irregular incomes can be forced to pay six to 12 months’ rent up front, which can have an enormous impact on their financial position. For some, access to this capital is simply not possible, and while the government has fiscal support measures in place, such as the UK’s Universal Credit Scheme, eligibility requirements have to be met and, if approved, it can take several weeks for the renter to obtain the capital.
While landlords have the discretion to approve or deny a tenant based on the status and quality of their documentation, the industry cannot ignore that the system and schemes still have gaps that many renters sadly fall through.
In reality…
Everyone should have an equal and fair opportunity to rent a property, that’s why Homeppl Guarantid exists - so people can have the chance to rent the right home for them.
We offer a professional guarantor service that acts quickly to ensure you get to move into your perfect property.
Secure your guarantor today with us!
A few common questions regarding guarantors:
Do I need a guarantor to rent a property in London?
You will need a guarantor in London, just as you will in any other area across the UK if you do not meet certain affordability criteria.
If you are renting in London, your financial and residential background will be tested as part of routine tenant screening.
If this is your first time renting property or you are experiencing any of the above case studies outlined in this article, it is likely you will need a guarantor.
Rent costs in London is higher than most of the UK on average and this usually results in a higher proportion of London renters who will require a rent guarantor.
Do I need a guarantor if I live in shared accommodation?
There are plenty of situations you may find yourself living in shared accommodation. University students often share halls or flats. Young professionals in urban cities such as London, Manchester and Birmingham will share accommodation.
These are examples of a 'joint tenancy agreement' in action. It is common for a guarantee to apply to all of the rent, and not just your share. It is always important to check the guarantee agreement you are entering because as soon as the guarantor agreement is signed, it is bound by law.
Homeppl Guarantid is different. Under our guarantee, we are liable solely for the tenant who goes through our screening process. If you want to avoid asking a family member or friend to be totally liable for your rent as well as your housemates' rent - our guarantor company solution is a good alternative.
Do I need a guarantor for an apartment?
People may need a guarantor for an apartment in the city, a house in the country side, a bungalow, barge or barn.
If you are renting your property from a landlord, you are legally required to go through tenant screening. You will need a guarantor if you do not pass the affordability check on that specific property.
How long do I need a guarantor for?
A legal guarantor agreement will last the duration of your tenancy. A change in the tenancy agreement could bring the guarantor's liability to an end but that is atypical with private guarantors. You would not need to worry about guarantor liability with our commercial service as we would assume the financial risk without it affecting your family of friends.
