From choosing your new roommates to managing your rental deposit, student housing brings with it so much new territory for you.
The start of the new semester is just a few weeks away and it won’t be long before you can sign your first private rental agreement.
You certainly don’t have to rush to choose your second-year roommates right after moving into the dorm (in fact, we’d advise against it), but when it comes time to sign a contract, you might encounter the world of guarantors.
So what is a guarantor and how do you choose one? Here’s everything you need to know, according to experts.
What is a guarantor?
As Liz Hunter, director at Money Expert As Metro.co.uk explains, a guarantor is “someone who agrees to pay your rent if you are unable to do so, usually a parent or close relative.”
“If you don’t pay your rent, your landlord may ask your guarantor to cover the costs instead. If your guarantor cannot pay, there is a risk that the landlord may take legal action against them,” explains Liz.
“Your landlord will check your guarantor’s ability to pay if you are behind on rent by conducting a credit check. There is a legal requirement that a guarantor agreement be in writing and that it outlines the guarantor’s legal obligations.”
When concluding a new rental agreement, you may be required to provide a guarantor for many reasons.
One of these is to be admitted as a student, but it may also be required if you “have a limited or poor credit history, are on a low income, have moved to the UK from abroad, cannot provide references from a previous landlord, have County Court Judgements (CCJs) for existing debts or have been declared bankrupt,” Liz clarifies.
Who can become a guarantor?
Anyone can act as a guarantor and while the person does not necessarily have to live in the UK, Liz is aware that some landlords prefer this in case they have to appear in court.
“Landlords may want someone who is a homeowner themselves and usually earns above a certain amount. They must be over 18 and in a solid financial position,” notes Liz.
“Guarantees are usually close family members or close friends, (but) theoretically any person you know can be a guarantor.”
Landlords and real estate agents typically require information about your guarantor’s credit score, income, employment, social security number and banking information.
“You can also ask for references to ensure the guarantor can cover your rent if you fall behind on payments or, in some cases, pay for any damage to the property,” adds Liz.
If you don’t have access to a UK-based guarantor, Hello Neighbour CEO Richard Jenkins explains there are still some options you could consider – including the option to pay up front, although this may not be affordable for everyone.
“Some landlords are happy with this, others may not, but it’s still an advantage you can exploit if you’re able to. In general, offer as much as you can – between 6 and 12 months is common,” says Richard.
What you should consider before becoming a guarantor
There’s no doubt that choosing – and agreeing – to be a guarantor comes with risks. And as Liz tells us, the worst-case scenario is that the guarantor is left with debt.
First, remember that a surety agreement is a legal document. Your guarantor will need a copy of both the lease and the surety agreement and should read both thoroughly before signing.
Second, as Liz notes, if you live with other tenants in a shared apartment under a tenancy agreement, it is common for the guarantee to cover the entire rent – not just your share.
Expert reveals one thing you should not forget before studying
Aside from new roommates and potential arguments over the dishes, there is something you need to consider before you move out – and that is protecting your belongings.
We know that insurance is not that exciting to think about, but it is necessary. How would you feel if your laptop was lost or your speaker was damaged at a party?
In fact, a recent study by Confused.com found that over half (58%) of UK students do not have home contents insurance – despite one in twenty students experiencing a burglary while at university.
It is therefore advisable to check whether you are already covered by a parent or guardian’s insurance before you leave in September, advises Anna Thunstrom, building insurance expert at Sagas.
“Some standard insurance policies automatically cover students against theft or loss while living in temporary accommodation, provided their parents’ home remains their primary residence,” explains Anna.
If this is the case, remember that only the items that are in your temporary home – or that are traveling to and from your parents’ address – are covered.
You also need to consider when liability ends, as many contracts are open-ended and mention liability “for the duration of this tenancy/contract”.
“This means liability can extend beyond the agreed term, for extensions and for certain changes, including rent increases,” adds Liz.
“In this case, the guarantor’s liability exists for as long as the tenancy exists and only ends when the tenancy is legally terminated by an effective termination of the tenancy by the tenant, a mutual return of the tenancy between landlord and tenant or an eviction order from the court.”
Common mistakes made by guarantors
Of course, mistakes are often made when choosing a guarantor or accepting a guarantor offer. As Adam Powell, Director at WS Resi, explains, one of them is not being clear about the extent of the obligation.
“Common mistakes made by guarantors are that they do not fully understand the legal and financial obligations, such as the extent and duration of liability. Many agree to be guarantors under pressure without considering the potential financial burden or impact on personal relationships,” says Adam.
“Some guarantors view rent arrears as a hypothetical situation and think it is unlikely that their family or friends would ever get into debt or betray their trust. However, it can happen,” adds Liz.
“Make sure you understand exactly what you are signing and don’t be afraid to say no if you are worried about anything. Consider the impact on your own finances if you get into trouble. Can you really afford the debt – and would you want to?”
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