How can rent guarantors help level the rental sector playing field

Between higher mortgage costs being passed on to tenants in the form of higher rents, and increased competition for homes, as more and more landlords exit the market, it’s a tough climate for the UK’s renters right now. Can rental guarantor services really make a difference? We put that question to Graham Hayward, chief operating officer of Housing Hand, to find out. Tough times for renters Rents shot up as mortgage costs increased during the latter half of 2022. Rightmove saw annual rises in rents hit as much as 20.5% in some areas, as many landlords put rates up to cover their growing mortgage payments. Overall, according to Hometrack, rents rose by 12.1% in the year to December 2022. Nor is the pain over yet, with further rises of 4-5% projected during 2023. Exacerbating the situation is the rate at which landlords are throwing in the towel. Legislative changes have chipped away at the profitability of being a landlord over recent years and for many the coming EPC requirements – and their associated costs – are just one leap too many. Propertymark reported last year that approximately 30 properties were available to rent per estate agent branch in March 2019. By March 2022, that figure had dropped to just 15.6. In London, meanwhile, Chestertons reported a drop of 38% in the number of available rental properties between July 2021 and July 2022, while tenant enquiries increased by 60% over the same period. The UK rental sector is facing a difficult year ahead from all angles. It needs long-term thinking and strategic support to avoid a steadily worsening situation for both renters and landlords. The government has an opportunity to make policy changes that will reverse the decline in landlord numbers, but it will take swift and decisive action for that change to be felt in the near future. Where do rental guarantors fit in? Renters have to jump through various contractual and financial hoops when securing a property, including the need to stump up a deposit and pass referencing – both of which can be harder to do with so many cost-of-living pressures stacking up. The result is that renters who have the means to sail through referencing swiftly can secure the properties they want, while those who may struggle with referencing miss out. The cost-of-living crisis also means that many individuals who would have previously been able to act as a guarantor are no longer in a position to do so. This is where rental guarantor services come in. A rental guarantor service stands in place of an individual guarantor. The service provides landlords with the assurance that their rent will be paid and thus supports renters to access accommodation. At a time when the private rented sector is facing threats to its longevity from multiple directions, it is important that we do all we can to support both landlords and tenants. The private rented sector is a valuable resource that needs careful attention if we are to preserve it. This is why services such as pre-validation checks and rental guarantor services are so important. What other guarantor options are available to renters? As well as individual guarantors and rental guarantor services, renters may also come across rent guarantor insurance. This is an insurance product rather than a service. The renter buys the insurance and, if they become unable to pay their rent, the insurance company pays it. The company then pursues the renter to cover the cost, usually along with fees and interest. Rent guarantor insurance products are often capped, often won’t cover joint and several contracts and don’t usually cover damages, meaning they are not suitable for all circumstances. It is important to understand what you are buying when it comes to guarantor products. With a rental guarantor service, the company doesn’t usually limit its liability – instead, it will have its own liability insurance in place to protect it from any larger default claims. If in doubt, review any potential product or service thoroughly online, including checking out Trustpilot scores and comments. The rental market is a tough place for renters right now, but the right services can certainly help. Byline: Housing Hand

How can rent guarantors help level the rental sector playing field

Rent guarantor insurance products are often capped, often won’t cover joint and several contracts and don’t usually cover damages, meaning they are not suitable for all circumstances

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