Chasing a Guarantor for unpaid rent arrears

Chasing a guarantor for unpaid rent arrears

A growing challenge for UK Private Landlords is chasing guarantor for unpaid rent arrears. According to a recent survey by Which? a staggering one in twenty tenants did not pay their rent last month (April 2023) With this huge rise in unpaid rent arrears, landlords are being forced to pursue guarantors for missing payments.

Obviously this is only an option where a rent guarantor is in place. Normally the rental guarantor will have a good credit history and be able to cover any shortfall in rent payments. When the tenant misses a rent payment, Landlords are sometimes left with no choice but to pursue the guarantor for payment.

Very often, a Rent guarantor is more commonly requested in the Private Rental sector.

What is a Rent guarantor?

A rent guarantor is a person who agrees to take on the financial responsibility of ensuring the tenant pays the rent if they are unable to do so. The guarantor is usually a family member or close friend of the tenant and they sign the tenancy agreement along with the tenant.

When the tenant falls behind on their rent payments, the landlord has the right to demand payment from the guarantor. According to the law, the guarantor is legally obligated to pay the rent arrears if the tenant fails to do so. This means that the landlord can chase the guarantor for payment just like they would pursue the tenant.

Who can be a Rent guarantor?

In brief, anybody can be a rent guarantor who is considered of good financial standing. This can be either by the landlord or a property management company that is managing the tenancy of any respective property.

Normal caveats to be a rent guarantor include them being UK based with British citizenship. They must be of good financial standing with a decent credit history. The ability to cover any unpaid rent arrears in the event of non-payment of the rent.

It does not always have to be a family member. Anybody can be the rent guarantor as long as they meet the financial criteria as required by the Landlord or the Property Management Company.

Why is a Rent guarantor required?

Rent guarantors are usually needed when the Tenant has little credit history. Student tenant or recent graduates often need guarantors for tenancy agreements as they have barely any credit history. A Rent guarantor provides a safety net for the Landlord should there be any issue with unpaid rent arrears. Chasing a guarantor for unpaid rent arrears will only be necessary if the tenant fails to honour the tenancy agreement.

Chasing rent guarantor for unpaid rent arrears

Before pursuing the guarantor via a third party for payment, the landlord should make sure they have exhausted all other avenues. This can include communicating with the tenant to find out why they are not paying their rent, offering payment plans to allow the tenant to catch up on their payments, and seeking assistance from housing charities or other organizations that offer support to tenants who are struggling to pay their rent.

If the landlord has done all of the above and the tenant is still unable to pay the arrears, then the landlord can pursue the guarantor for payment. This can be done through a formal letter before action, which should outline the amount owed and request payment within a specific timeframe.

Debt Collection for unpaid rent arrears

If the guarantor fails to respond to the demand letter or does not pay the rent arrears owed, the landlord can take debt collection and/or legal action against them. This can include filing a claim in court to recover the unpaid rent. It’s important to note that legal action can be a lengthy and expensive process, so before taking this step, the landlord should consider whether it is the best course of action. Very often, Landlords turn to Debt Collection for Landlords services. This is minimise cost and is a more direct and pragmatic route to recover unpaid rent.

Pursuing a guarantor for unpaid rent arrears can be a daunting task, but it is a necessary one to ensure that you are able to cover the costs of your property. As a landlord, it’s important to be aware of your legal rights and responsibilities and to exhaust all other avenues before pursuing the guarantor for unpaid rent arrears.

With the right approach, landlords can successfully recover the rent owed and hopefully maintain a positive relationship with their tenants and guarantors.

Common FAQs

How long is the rent guarantor liable for unpaid rents arrears?

For the whole duration of the tenancy till completion. A rent guarantor simply cannot walk away from their legal obligations even if they have had a falling our with the tenant. It is not as simply as that and the rent guarantor remains liable for unpaid rent arrears therein as long as the tenancy exists.

Is a rent guarantor liable for the full amount of unpaid rent arrears?

Yes to answer this question. They may also be liable for any damage to the property also. Being a rent guarantor comes with a big risk and should never be taken lightly.

What if the rent guarantor refuses to pay or ignores the Landlord?

If the Rent guarantor ignores all reasonable attempts at dialogue then our Debt Collection for Landlords services can help. We can take over the matter and take the appropriate action to recover owed monies on the landlords behlaf.

What Debt Collection action can be taken against a rent guarantor?

Full Debt Collection action can be taken against a rent guarantor on behalf of a Landlord or Letting Agents. This can include seizing goods or placing a charge on their property to clear the debt. Less than 1% of the cases we deal with require such action though and it is simply a case of engaging with the Rent guarantor to arrange realistic repayments.