OpenRent Community

Guarantors (understandably) don't want to sign contract

Hello, we have four tenants supposed to be moving in on Saturday. Only two of them needed guarantors. But these two guarantors are refusing to sign the contract because they don’t want to be liable for the whole rent amount – only their own daughters’ portions of the rent. Which is totally understandable… As they point out, the OpenRent contract doesn’t seem to set this out properly. Does anyone know what to do about this? OpenRent have been totally useless about getting back to us on this and other questions… Many thanks for any help!

Hi Krystoff, guarantors can’t be liable for just one portion of the rent in a joint Assured Shorthold Tenancy. Neither can tenants.

All signatories are joint and severally liable. That means any one of them can be pursued for the entire rental amount. Tenants can agree to pay different portions of the rent, but each are joint and severally liable for the payment of the entire rent, in full, every rental period.

As the landlord, you can give the guarantors assurances that you won’t pursue them for any more than their child’s share of the rent in the case of the tenants (taken as a whole) falling into rent arrears.

But these assurances will only be as good as your promises. Legally, you will still be able to pursue any signatory, tenant or guarantor, via the courts for the full amount if you choose.

If you want to avoid this being the case, then one option would be to split the property up into rooms and let them as rooms in a shared House of Multiple Occupation (HMO). This has regulatory and legal consequences, however, including consequences for the building layout and licensing.

I hope that answers your question!

Here’s more info.

Hi Sam, that is very clear, thanks – though seems strange we couldn’t put a line in the contract saying the guarantors are only liable for their own children’s share… If that can’t work, I think we will try and get the other two to have guarantors as well.

You could include this. Indeed, my tenancy agreement specifies the rents of each individual tenant. But my understanding is that this kind of term would not be enforceable, since all parties are signing a joint and severally liable tenancy agreement, and that means that all are joint and severally responsible for the obligations described therein.

Yes, that might make them feel better about being on the contract.

Krystoff . you really only want part of your rent back if there is a default.

Sam,
Isn’t the property an HMO anyway? Surely it’s just the number of unrelated sharers that determine HMO or not. Whether it’s a licensable HMO will depend on the number of sharers and local council rules. Whether or not you have a joint AST or separate ones for each room is irrelevant isn’t it? In any event, you have to follow the additional safety rules for HMOs.

Krystoff, your local housing department or possibly the accommodation office for the college or uni your students are attending should be able to advise you. In the meantime search out HMO licensing on the web but note that the law changed last October.

Which HMOs must be licensed?

Mandatory HMO licensing applies across England to any property occupied by 5 or more people, forming 2 or more separate households.

Additional HMO licensing

A House in Multiple Occupation which does not meet the criteria for mandatory licensing can still require a HMO Licence. Councils have discretionary powers to extend licensing to other categories of HMOs which are not subject to mandatory licensing. This is known as additional HMO licensing.

I think the house may already be an HMO as you have more than 2 “households” - so I hope you have the relevant things in place such as additional fire precautions etc.

This is a very common situation with students - even when they rent individual rooms they are jointly and severally responsible for everyones rent and all maintenance/damage.

As a parent I was not happy acting as “joint gaurantor” for 5 students my daugher had only known for a few months - even although the other parents were in the same position.

I got it in writing from the agency that they would chase the defaulting student, the defaulting students guarantor, the other students and finally the other guarantors in that order - but both me and the agency knew that if push came to shove they could in fact decide to chase just one of the guarantors. Even offering to pay my daughters 12 months rent up front wouldn’t make them allow her to be on the agreement without a guarantor!