Guarantor for rent

[cremeegg]

My tenants are moving out at the end of the month and I will be re-letting the property.

I have thought about asking new tenants for a guarantor for the rent. Any new tenants are likely to be young people in the early stages of their working lives. The tenants now leaving struggled to pay rent recently and while it worked alright eventually it was an issue for a while.

Is asking for a guarantee a good idea. How could I actually get a guarantee. Would I ask for the guarantors bank details, or details of their assets. While I would accept any suitable person as guarantor, I would expect that it would be parents in that role.

If it came to it how could such a guarantee be enforced.

Any insights would be welcome. Thanks.

 

[Palerider]

A guarantor would have to be chased through the Courts at some cost and with an uncertain outcome, I see your point of view and support your thinking but if you have to rely on a guarantor then you chose the wrong tenants.

 

[Gordon Gekko]

Are there other things you could look at?

Target higher earners?
Ask for 3 months’ rent as deposit?
Make it 3 month’ rent payable in advance?

 

[NoRegretsCoyote]

It depends on what end of the market you are at. If you are in the >1500 pcm space then just price competitively, and pick the tenants that look financially the best.


Good advice I got from an agent once was to pick people in the early stages of a decent career path. If you are getting promoted and seeing pay rises then you are not likely to have problems meeting the rent.


If you are letting a 1-bed apartment in a rural town you won't have too many professionals lining up. If you are worried about a young person's earning capacity and want parent to guarantee it might just be simplest to get the parent on the lease too.

 

[cremeegg]

If you are in the >1500 pcm space then just price competitively, and pick the tenants that look financially the best.

I'm not too sure about this. I don't want to price competitively, I want to maximise my profit, I am in business after all. Also in my experience being priced competitively attracts potential tenants who can't really afford the rent.

Good advice I got from an agent once was to pick people in the early stages of a decent career path. If you are getting promoted and seeing pay rises then you are not likely to have problems meeting the rent.

That does seem good advice, I will remember that.

If you are worried about a young person's earning capacity and want parent to guarantee it might just be simplest to get the parent on the lease too.

Thats an interesting thought. What other implications might there be to having a non-resident on the lease.

 

[Baby boomer]

One tip about pricing your BTL rent. Beware the potential tenant who agrees readily to the rent without even trying to negotiate or haggle. They may have no intention of actually paying the rent!

I'd thoroughly agree with the advice to pick people in the early stage of a decent career path. I'd offer a small discount (50 - 100pm) in return for a larger than usual deposit, say three months. They then have an incentive to keep the place in good nick. And get an employment reference and work contact details.

Since getting an apartment back from a heavy smoker that stank of tobacco, I've always put a "no-smoking" clause in the tenancy agreement and specified that a breach will lead to a forfeit of deposit. In practice, I will actually price it higher than my target and offer a "discount" for non-smokers.