Hi.
We increased the rent by 5A form (if I’m not mistaken. It’s unilateral increase). Didn’t have any communication from T. He didn’t pay his last rent. Is responsibility of a guarantor invalidated?
Thank you.
Forgive me for asking as I am Not a ll but wouldnt this be the time that a Guarantor WAS valid I was under the impression that once a guarantor had been established it was THEIR responsibility for the duration of the tenancy (as I say I may well be wrong)
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Its form 4. I hope you used the right one.
What does your guarantor sgreement say about rent increases?
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What does you Guarantor agreement say?
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That’s right —— guarantor is there to guarantee the payment. The payment was paid and the disagreement have to be sorted —— get back to the agreement. Hope that helps
According to Tessa and Landlord Law, once you increase the rent, the guarantor is no longer liable because you have changed the terms that they originally agreed to. I asked whether this means that you cannot even challenge them to cover the amount they agreed to (less the increase) and she said that was correct because consumer law prevents it.
If someone’s willing to correct Tessa then I’m all ears.
I have read that and heard her say that. However , this depends on how the guarantor deed is written. The N r l a deed does make them liable for rent increases so I use their deed.
Obviously if I write a new AST then it follows that I write a new deed which I did do because of that very statement that you quoted but then I changed the deed
my solicitors contract is a contractual periodic with a rent review clause so the periodic actually is held to the same terms so I wonder if there is precedent to refute that statement ?
The way I look at it is that as I don’t raise rents for a while, by the time I do, the tenant has established a trend of paying rent on time and in full. IOW, by the time I get around to raising the rent, the chances of me having to rely on their guarantor are negligible anyway.
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We use Deed of Guarantee by N R L А. In Section 7 “Variations of Tenancy” it says:
7.1 The Guarantee will continue in force, even if there is variation to the terms of the Agreement with or without Guarantor’s consent (including any increase in the amount of Rent payable in respect of the property by the Tenant) but subject to the provisions of this clause.
It’s the second month T is struggling. He just about coughed up for the previous month (said it would not happen again, LOL), but now he missed his payment date again and is not communicating.
I wonder how long do we need to wait to involve a Guarantor (his mom)? Is it ok to write to her if a couple of days have passed or do we need to wait longer? And is there a form to send or the request to cover the rent amount is free style?
Thank you.
I would communicate sooner rather than later. Mother’s are usually quite helpful (but not always)
At least then you know if you are looking at a s21 or just a hiccup if she is toxic or non toxic
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Tessa said that clauses like this are unenforceable under Consumer Rights law
I meant that its form 4 for a rent increase, not form 5A.
I’ve used the N R L A guarantor agreement once as well and noted that it claims to be valid even if there are rent increases, (although not tenancy renewals). I assume that N R L A have taken legal advice on the wording, but I’m not sure I would want to risk good money fighting a court case to enforce it.
I wrote a detailed response to the question of whether rent reviews can invalidate guarantees but it included web links which meant Open Rent wanted to approve it prior to posting. However after 13 days they have done nothing so I now post it without the links.
Sadly I disagree with Tessa, for whom I have considerable respect.
Shelter have a succinct rebuttal to the proposition that a rent increase automatically discharges a guarantor’s liability. They say this (you will have to search to find it):-
’ Increases in rent may be enforceable if the tenancy contains a rent review clause and the guarantee specifies rent due ‘under the tenancy’ (or similar).’
But consumer law does apply, specifically the Consumer Rights Act 2015. Shelter refer to this also elsewhere on their website.
It is very important to ensure that guarantee agreements are worded to take account of the current state of the law, but a well-drafted guarantee can survive a rent review and thankfully the Renters’ Rights Bill is unlikely to affect this question.
Replying to David122 about costs, a claim against a guarantor for unpaid rent can be made using the Moneyclaim Online Service. For a claim up to £3,000 the cost is £115. The defendant is unlikely to be able to claim costs if the claim is unsuccessful and is under £10,000. It is an almost risk-free and very useful service.
One has to follow the pre-action protocols, but the whole thing is very easy to manage. I have used it going back to the days of the Small Claims division of the County Court. If claims are made early when the amount of the default is small and the defending guarantor is a property owner or has a good reason not to want a judgement recorded against them they will always find the money to pay the claim and the mere threat of a claim (in writing) is often enough to achieve prompt settlement and usually pressure on the tenant to surrender the tenancy. Guarantors don’t want to honour their guarantees and once bitten they will try very hard to take the risk away by persuading the tenant to make other arrangements. Interestingly I have also found that if parents show any reluctance to guarantee children it can mean that they don’t trust their own kids, for good reasons.
The essential thing as with all tenancy disputes is to nip defaults and breaches in the bud. Breaches can sometimes be rectified and the landlord/tenant relationship rebuilt but when I was managing large estates I never had a single case where a defaulting tenant became a good tenant and in the end I adopted a “one strike and you’re out” policy except in cases of genuine personal hardship where good evidence, never word of mouth, was provided.
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I suspect that the key point about the Shelter rebuttal is that there must be a rent review clause in the tenancy agreement. A Guarantor must see the TA in advance of signing the guarantor agreement and is therefore agreeing to its conditions when signing.
With no rent review clause, the Guarantor might argue that the agreement he signed was for the Terms and Conditions in effect at the time.
I think I did quiz the N R L A on their “perpetuity” clause at the time of using it, (about 3 years ago), but got a bog standard reply that I dismissed. I dont think there have been any binding test cases, but some lower courts will no doubt allow it whilst others wont.
David122 - I agree with what you say.
I drafted a slightly longer post but again it was flagged for review, second one in a row and the last one sat for 13 days with nothing being done - I can see nothing wrong with it but I have deleted it. I shall now cease posting in this forum.
The n r l a 's legal counsel is David Smith
Tessa does ask David Smith for advice on her contract
I don’t think the n r l a would write a clause that would likely cause issue for landlords that are more likely to sign with the n r l a than Tessa
I have a foot in both camps but will stick with the n r l a on this one
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Thanks for that. But I thought that new RRB will treat requesting a Guarantor as discrimination (I think Shelter or other similar organizations were campaigning against it because some LL routinely request Guarantors, and not all TT can provide one)? The idea is that if T can afford first month rent plus deposit, it’s proof enough that they can afford the rent (stuff and nonsense).
Or did I confuse something?
You did. These are just suggestions / proposed amendments. Nothing is final yet.
I’ll continue posting in this thread, then I’m out.
The only reference to guarantors in the renters’ Rights Bill as brought to the HoL is in s.21 which absolves guarantors from liability to cover rent payments after a tenant’s death. It’s more complicated than that, s21 is IMHO unnecessarily verbose, but that’s the essential point. In the HoC committee Mathew Pennycock rejected arguments in favour of a complete ban on guarantors. He was adamant he would not countenance it, the relevant amendment was withdrawn, and if it is re-introduced in the Lords it will be kicked out again. It’s a red herring. It’s not going to happen.