Renters on high salaries increasingly asked to provide guarantors

There has been a significant increase in the number of renters on high salaries being asked to provide guarantors, a survey reveals.

The findings from the RentTech platform Goodlord come from analysing 783,000 tenants who submitted a tenancy application between January and September in 2020, 2021, 2022 and 2023.

Of these tenants, 138,949 were asked to provide a guarantor.

The data shows that the overall rates of guarantor requests have been fairly steady since 2020, with 17.7% of all tenants being asked to provide a guarantor in 2020 compared to 18.4% in 2023 – that’s an increase of just under 4%.

‘Asking for a guarantor’

Goodlord’s managing director of insurance, Oli Sherlock, said: “Asking for a guarantor used to be very concentrated amongst student tenants and those who, on paper, looked like they may be renting outside of their means.

“The pandemic widened this net and asking a broader demographic of tenants for additional assurances became embedded for many landlords and agents.

“As this analysis shows, the practice has trickled out beyond the ‘traditional’ groups, meaning higher earners are increasingly likely to find themselves providing guarantor details.”

He added: “This practice will undoubtedly be frustrating for tenants who easily meet affordability checks.

“However, landlords have faced four years of intense uncertainty and complex regulatory changes; their desire to seek out additional assurances isn’t illogical.

“A sensibly utilised system of guarantors is a vital feature of any healthy rental market, but agents should caution against excess or unnecessary use of the practice.”

Data is broken down into salary brackets

Goodlord says that when its data is broken down into salary brackets and age, a new picture emerges.

For tenants with no income, which will include students, the number of guarantor requests has been broadly stable since 2020.

However, for all other income groups, there has been a significant increase in guarantor requests when comparing figures from 2020 with those from 2023.

The firm says the biggest percentage shifts are seen at the higher income levels.

Asked to provide a guarantor

For instance, tenants earning between £50,000-£74,999 are 82.3% more likely to have been asked to provide a guarantor in 2023 compared to 2020.

In 2020, 1.47% of this group were asked to provide a guarantor, rising to 2.68% by 20231.

This trend indicates that a ‘new normal’ was established in 2020, as the rise in guarantor requests during that year was likely driven by the market uncertainties created by Covid.

However, instead of dissipating following the peak of the pandemic, guarantor request rates have stayed high.

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