I am renting out to a single tenant who is keen to have two guarantors collectively covering the total cost of rent in future (they are happy to work together). I understand that they would individually fail the credit check element of referencing (36x multiplier of rent) but their total income would cover. Is it possible to reference guarantors together and include them in contract to act in this manner? I am struggling to find information about this.
my my⌠I would avoid this. A guarantor by definition guarantees the contract the tenant signs. Neither of these individuals could. If you do have to pursue them with legal action, it could get extremely messy.
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Terrible idea. Donât pursue.
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You could accept if each of the guarantors agreed to sign the form covering the full amount, but had a private arrangement between them to cover half each if the need ever arose.
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@Bini this âmightâ work if the two guarantors are legally/financially connected in some suitable way eg they are married.
But if each fails referencing/affordability on their own, either could fail to pay up if tenant defaults on their commitment. And costs of pursuing both would be higher.
You likely wonât be able to get rent guarantee insurance either (check with your insurer). RGI is obviously more desirable when you know tenant may struggle with affordability/paying.
Consider what if anything is so attractive about this tenant rather than all the other tenants who pass affordability or at least have guarantors who do? You arenât running a charity decide for business reasons -Why take the risk?
er⌠so how would that suggestion pan out in court then? Possibly like this: two plaintiffs each saying the other agreed to half with no legally binding proof while both legally being on the hook for the whole and claiming theyâre skint so the other should pay?
@Bini Youâve only created three threads on OR and all three have involved questions about guarantors. Finding tenants who donât require guarantors is a far better form of insurance.
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Perhaps my post wasnt clear. Each guarantor would be signing the deed to cover the whole rent. The landlord would have no part in any private arrangement between the two guarantors to cover half each. If a claim against the guarantor was needed, the landlord would initially contact them both informally to request payment. If it needed to go to court, he would select one of the guarantors to sue.
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@David122 but if neither individually can afford they donât make good guarantors, do they? They wonât pass affordability referencing and LL canât get RGI. And sue or not they will struggle themselves to cover arrears built up over, say, at least 3 months by tenant
If Iâm too poor to afford the rent and will struggle, does it really help if I offer two other equally poor people as guarantors, really? They will have their own rent to pay as well and so covering the tenantâs shortfall if that happens isnât going to work. Thatâs why RGI providers insist a guarantor passes affordability checks, so they have a realistic chance of getting back from guarantor.
Er⌠by tossing a coin?
As David says, if neither of them can afford it, what is the purpose of pursuing legal action?
While on the surface it appears that two guarantors are better than one, in reality, itâs the opposite. Each can simply bail on any unenforceable âprivate arrangementâ and argue that the other signed a deed to cover the whole rent.
@David122 never advised to accept these guarantors or advised to go to court with someone who could not afford it. He appears to have offered advise of what âcouldâ be done, not offering a personal opinion on whether it âshould be doneâ, so Im unsure why people are being critical of his post.
In my opinion, there are advantages to accepting a Guarantor with questionable affordability. If a tenant does not pay, they know the Landlord will be approacing the Guarantor, and for this reason it provides motivation not to miss payments. If a tenant does not want to âlet the Guarantor downâ, they will have motivation to keep payments upto date.
Whether it would be worth enforcing against the Guarantor is a seperate matter.
@Karl11 I think others including myself have just provided fair comment and highlighted the risks of what @David122 has said could be done, which donât really provide much of a guarantor in reality
- if tenant knows guarantor is poor and unlikely to be able to actually pay up in practice that just means they are acting in bad faith.
- It may or may not affect whether they feel more committed to making the rent and their level of commitment may have no bearing on their actual ability to pay.
-And tenant will also know LL knows guarantor is poor so may never even try to pursue and certainly not sue with court/legal costs.
-if multiple poor friends could act as a guarantor and it worked in practice, why do insurance cos bother insisting on guarantors passing the affordability tests.
You are right a tenant who fails affordability with a guarantor who also fails is maybe sometimes better than a tenant who fails affordability alone. But unless you have a property that canât attract someone who can actually afford it, why would you accept either? Thereâs no point in paying for affordability tests then ignoring the results if they donât give the answer you want.
Have a great day
Although following his advice is possible, my comments are hopefully highlighting that I donât think itâs a practical solution to the problem. I believe it would lead to complications down the road if you ever had to rely on the guarantors⌠which is what I believe you should always assume.
Apologies if thatâs not clear from my posts.
If Bini wishes to pursue a tenancy with this applicant, I think that the sensible course of action would be for the two guarantors to sign a legally binding agreement, perhaps drafted by a solicitor to provide half of the funds each of any claim. This would be up to them of course, but knowing that the landlord could choose to sue either one of them, and yes a coin toss is probably the best option as both will understand that it could be them, this would be in their interest. Failing affordability on paper doesnt necessarily mean they couldnât individually afford the costs, it just means it may take longer and drain their resources. That should help focus their minds. Bini should ensure the full implications of the above are understood by each guarantor and the ball is then in their court.
That would probably be the only way to make this legally watertight. Do you think an RGI provider would agree though?
Quite why anyone would go to this trouble when the current market presents so many applicants to choose from is a mystery to me.
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Ive never used RGI and only once used a guarantor, so I have no idea whether this would qualify. Maybe Bini will think she doesnt need both RGI and a guarantor though. I would probably take the risk if I had confidence in the tenant.
@David122 but if tenant themselves are keen to have guarantor they may be concerned about risks of rent arrears or even anticipating it
@Bini âs choice of tenant and what risks willing to take.
I guess such a tenant might still be attractive eg someone with high savings but low income who fails standard affordability checks based on income and offers guarantors x2 instead and can show a history of on time rent payments. But without all the details we canât judge
Having never used it, I was mistakenly under the impression RGI would require a guarantor to mitigate against loss. Apparently not so which makes sense as a guarantor implies increased risk of non-payment by the tenant.
I think it does depends on the RGI provider. Havenât used the OR RGI myself and would need to check my policy but on here people have def mentioned guarantors needing to pass. ORâs page says a guarantor is needed to qualify for RGI if tenant fails in various ways..
âTo qualify for Rent Guarantee Insurance (RGI), either the combined affordability of comprehensively referenced tenants must cover the monthly rent, or any comprehensively referenced guarantors must have sufficient affordability to cover any shortfall for tenants that arenât comprehensively referenced, fail referencing, or cannot afford their equal rent share. In addition, our RGI policy does not cover live-in landlords.â
Thanks to all for providing thoughts, which is appreciated 
Just weighing up options to decide next steps.