Just when landlords thought it couldn’t get any worse?

Important update:

The below Clause 11 amendment did not make it through the House of Commons debate and was not put to a vote for the impending 2nd reading of the Renters Rights Bill in the House of Lords.

However Section 21 Guarantor not liable for rent payable after tenant’s death did make it through to the second reading

This introduces provisions to prevent guarantors from being held liable for rent payments after the death of the tenant they are guaranteeing.

Before the debate, Housing Secretary Angela Rayner emphasised that this amendment will safeguard bereaved guarantors, often family members, from facing financial hardship during a time of grief.

She said: “For far too long working people and families have been at the mercy of a fickle and unfair rental market, faced with outrageous upfront costs, and struggling to find a safe and secure place they can truly call home.

“Another change in law will safeguard bereaved guarantors, who are often family members, from being forced to pay rent for the rest of the tenancy where a loved one has died.

“This will mean families will not be put in unfair financial hardship during a time of grief and will not be liable for extended periods of rent when trying to end the tenancy agreement in unforeseen and tragic circumstances.”

Just when landlords thought matters couldn’t get any worse, a clause 11 was proposed for the Renters Rights Bill.

The clause 11 concerns restrictions on the requirement for tenants to provide a guarantor with details below:

“(1) A relevant person [i.e. a landlord or his agent] must not, in any of the circumstances set out in subsection (3), require a person, as a condition of the grant of a relevant tenancy, to provide a guarantor in relation to the observance or performance of the tenant’s obligations under the tenancy.

(2) For the purposes of this Act, requiring a person to provide a guarantor includes accepting an offer by that person to provide a guarantor.

(3) The circumstances are –

(a) that the person has paid a tenancy deposit or has been assisted under a deposit scheme;

(b) that the person is required to pay rent in advance equivalent to one month’s rent or more;

(c) that on a reasonable assessment of their means the person’s income (including state benefits received and any other lawful source of income) is sufficient to enable them to pay the full rent due under the tenancy;

(d) that arrangements will be made for housing benefit or the housing element of universal credit to be paid directly in respect of rent to the relevant person;

(e) that the relevant person has entered into a contract of insurance under which they are insured against non-payment of rent; or

(f) such other circumstances as may be prescribed in regulations made by the Secretary of State.

(4) In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee shall not exceed a sum equal to six months’ rent. (emphasis mine)

In other words, if ANY of (a) to (f) apply, landlords cannot require a guarantor.

Given that almost all ASTs in the private rental sector require a deposit and a month’s rent in advance, this will mean a massive increase in risk for landlords.

The debate in the Commons last week https://hansard.parliament.uk/Commons/2025-01-14/debates/E7CB5480-DDD4-4F24-AB48-E957C964DC5A/Renters%E2%80%99RightsBill shows how out of touch with the workings of the rental market many MPs are.

To quote just one Labour MP, Alex Sobel (MP for Leeds Central and Headingley) said:

“The expectation that tenants, despite entering into legally binding rental agreements, must secure a third-party guarantor undermines the very purpose of their rental contract.”

A more naïve and ridiculous statement it is hard to imagine. Does he not realise that a guarantor is required simply because the primary obligor’s covenant is not sufficient?

On his (pitiful) analysis, signing a “legally binding rental agreement” (what other sort is there?) means that a guarantor is not needed. How on earth can anyone think that having a guarantor undermines the purpose of a contract?

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