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Emma
27-09-2006, 11:49 AM
Hi
I'm new to this.. so apologies if my terminology is a bit rubbish. Anyway I am renting out my flat, it's been advertised for a few months... and thought I had a tenant.. they are DSS which isn't a problem and I was expecting them to move in on Friday. The agent has called today saying that her guarantor doesn't fit the criteria for being a guarantor as he doesn't earn 3 times the annual rent. What does this mean for me legally, bearing in mind that the money will be coming directly from the council. Am I taking a risk by saying yes?
Any help will be appreciated.
Thanks very much
Emma

settloe_99
27-09-2006, 12:26 PM
Are you using HomeLet or some other form of rent guarantee scheme?

The reason I ask is because these companies usually insist that for someone to meet their criteria as a g/tour they must earn at least 3 times the annual rent. This is because if the tenant defaults on payment of the rent then the rent gaurantee scheme want to know that the g/tour earns enough to honour their obligations as g/tour.

Personnaly I don't enquire how much a g/tour earns, I do a credit check on them and also a Land Regsitry check to confirm they are home owners.

cmack
27-09-2006, 12:29 PM
yes a BIG risk. HB sounds and is a very good way of taking a long term tennant on. theoretically hb is paid month in month out but what if your tennant breaks the terms of the hb criteria and has the hb removed? hb tennants are nothing like paying from their own means tennants. theres little to no chance of you getting the payment from them so you absolutely need a next point of call for rent.
no court ( should it get that far) will enforce payment on a guarntr who you knew would be unable to pay you.
also has your agent told you that a hb tennant will be told by the LA to stay put even with a court ordered eviction until the baliffs remove them because to leave before then technicaly theyve made themselves homeless and arnt entitled to new accomidation!
its a minefield, you MUST MUST MUST get a suitable guarantor.
I dont wish to sound like a meanie and I do have some hb tennants but im very aware of the ramifications, costs and ructions ahead of me should it all go belly up.
also each one does have a guarantor that i will get rent from should it be needed. they all own their own homes to.

Ericthelobster
27-09-2006, 13:34 PM
Personnaly I don't enquire how much a g/tour earns, I do a credit check on them and also a Land Regsitry check to confirm they are home owners.Why not? Don't you ask how much a prospective tenant earns, as to whether they can afford the rent? The whole point of having guarantor is that they should be able to afford to pay your applicant's rent and cover any damage... yes they might be a home owner, but that could still mean they have a pretty low income / mortgaged up to the hilt etc. And if your tenant defaulted, and you then discovered that the only way of getting the money owed was for the guarantor to have to sell or remortgage their own home, I think you can be pretty sure it wouldn't be an easy task to get your money!

settloe_99
27-09-2006, 15:44 PM
In answer to your question Eric, I don't know. It's just something we've never asked. Obviously we always take employment references from potential tenancts. The credit check we do on the g/tour tells us if they are mortgaged up to the hilt and shows us whether they are living beyond their means. We also have a clause in our guanatee's which states that the g/tour confirms they are able to meet the commitments of the rent & their own current commitments should they be required to. As I said in a previous post a while ago on the issue of forcing g/tours to sell property to, it's not something we would do. As long as we have the security of the debt being secured against the property we wouldn't apply for an OFS and would wait for the g/tour to sell. I think it would be very hard to convince a judge to order someone to sell their £100k home to repay £1000 which is owed.

On the subject of what information should be taken from g/tours/tenants I spoke to a landlord this morning who told me he doesn't bother taking any type of references as he believes they are always lies anyway and by the time he's got them he's lost 3-4 weeks rent so he just takes people on face value. No that is madness!!

mtenant
28-09-2006, 07:18 AM
a income 3x the rent seems picky, my dad is semi retired and is my guarantor and my landlord was happy as long as he owned his own property which he does. I am on housing benefit and havent had rent arrears in the 3+ years I have been with my landlord so 2 points saying a benefit claimant is immediatly risky and a garantor is risky because they below 3x the rent is wrong. A working tenant could just as easily lose their job and any guarantor can get funny about paying up.

mtenant
28-09-2006, 07:20 AM
In answer to your question Eric, I don't know. It's just something we've never asked. Obviously we always take employment references from potential tenancts. The credit check we do on the g/tour tells us if they are mortgaged up to the hilt and shows us whether they are living beyond their means. We also have a clause in our guanatee's which states that the g/tour confirms they are able to meet the commitments of the rent & their own current commitments should they be required to. As I said in a previous post a while ago on the issue of forcing g/tours to sell property to, it's not something we would do. As long as we have the security of the debt being secured against the property we wouldn't apply for an OFS and would wait for the g/tour to sell. I think it would be very hard to convince a judge to order someone to sell their £100k home to repay £1000 which is owed.

On the subject of what information should be taken from g/tours/tenants I spoke to a landlord this morning who told me he doesn't bother taking any type of references as he believes they are always lies anyway and by the time he's got them he's lost 3-4 weeks rent so he just takes people on face value. No that is madness!!

Sounds like common sense, all these credit checks etc. done now days is all way ott for what is essentially something thats short term usually 6-12 months for most AST.

MrShed
28-09-2006, 10:51 AM
Sounds like common sense, all these credit checks etc. done now days is all way ott for what is essentially something thats short term usually 6-12 months for most AST.

Would you lend someone 4 grand upwards without checking them out? That is effectively what you are doing if you do not FULLY credit check and reference any tenant before they move in, and the same for any guarantors. Time is not the issue, money is.