Landlords Demand Guarantors: A Growing Trend

Brace yourselves for a trend that's taking the rental market by storm.

Research reveals that a growing number of landlords are now insisting on guarantors before signing on the dotted line for tenancies. According to software service Alto, a third of letting agents report an uptick in landlords demanding guarantors, with 11% noting a significant rise.

So, what's driving this shift? Well, landlords are feeling the pinch from rising mortgage costs, affordability concerns, and the looming Renters Rights Bill. Riccardo Iannucci-Dawson, CEO of Alto, explains, "Landlords are nervous, and that’s feeding through into stricter tenant requirements." With higher borrowing costs and regulatory reforms in the mix, landlords are tightening their belts and looking for extra security.

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The removal of Section 21 is adding fuel to the fire, making it trickier for landlords to regain possession of their properties. This perceived risk of arrears or problematic tenancies is prompting landlords to use guarantors as a financial backstop, especially when tenant affordability is on the edge or profiles are uncertain.

Government figures back up this trend, showing elevated landlord possession claims and ongoing arrears pressures. Meanwhile, average rents across the UK have surged over the past couple of years, further straining affordability in many regions.

In a nutshell, guarantors are becoming the go-to financial safety net for landlords navigating these choppy waters. So, if you're in the rental game, it's time to consider how this trend might impact your strategy.

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Want to hear more? Join Mal & Matt on the Property AI Report Podcast each week!

Access from your preferred podcast provider by clicking here

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