Tenant to pay 6 months upfront rent but with guarantor?

Hi Ann,
You will have no doubt heard the sayings 'Do not touch with a 10-foot pole' and, 'avoid like the plague!' - Why give yourself a huge headache six months down the line?
If this prospective tenant cannot provide a full Guarantor (credit referenced) you will be up shi%t creek without a paddle after the initial rental monies upfront have become exhausted if this tenant decides not to continue paying rent - Another point I would make, personally, I wouldn't accept this tenant with or without a Guarantor. Please be more risk averse, as you will be on your own and at the mercy of the useless Court system if this tenant doesn't honour his contractual obligations at the end of six months. To give a 12-month contract and only gain six months of upfront rent without a full Guarantor seems ludicrous to me - Regardless of liking the prospective tenant or not.

Think about putting these items in place to find a good tenant - A good credit history, RGI insurance, potential attachment to earnings order achievable as well as a full Guarantor!

What’s the purpose of a rent check if you’re going to ignore it ? So ….next applicant please. And obtain 12 months bank statements to get a clear picture of potential tenant’s finances. Credit search required also but not all information appears on such search, addresses can be hidden, CCJ’s don’t always show up. So definitely obtain bank statements is my advice.

Reply to the comment left by Dylan Morris at 13/01/2023 - 11:31Dylan is it legal to ask for copies of bank statements?

Ann my existing tenant, who has been in my property for 18 months now also failed the credit check but he had just been promoted and his wife was finishing her studies and able to enter the world of work. There was also a limit the guarantor could offer but I can't remember the details.

Despite the checks being 'failed', I decided to offer a short contract and if it worked out, then to continue the tenancy. (I also knew someone where they worked albeit different department and somehow, that felt a bonus). They are brilliant tenants and I am very glad that I took a risk.

Its like all new relationships - honeymoon period to start with, then sometimes they turn bad and you end up disliking each other.

A tenant that pays the rent is far nicer than one that doesn't. Put aside the fact the you like this tenant - this is your business and your financial future at risk. Ask yourself why the guarantor, presumably close to the tenant, will only guarantee for 6 months. What do they know about the tenant and why should you assume financial risk for someone you don't know?

Find a new tenant that passes comprehensive credit checks, get a guarantor for the full period or rent guarantee insurance (which requires a prospective tenant to have passed a comprehensive credit check).

Then, hopefully, you can sleep at nights.

Reply to the comment left by Londonlandlord at 13/01/2023 - 11:34
You can ask for bank statements, as do most mortgage lenders nowadays - However, prospective tenants do not have to supply them. That is their prerogative!

I would add, Landlords should be ICO registered in order to obtain sensitive personal data from prospective tenants and a GDPR Privacy Notice should be forwarded to the prospective tenant showing how their data will be dealt with.

Prospective tenants are under no statutory obligation to provide any personal data for credit referencing purposes nor is a LL under any statutory obligation to accept their application if no data is forthcoming.

Reply to the comment left by Londonlandlord at 13/01/2023 - 11:40
Yes, its ok to ask for bank statements. If they don't provide them, ask yourself what they're hiding and move onto the next person.

No such things as a short contract. Even with S21 still available, evicting someone is difficult with many months of stress and cost. When and if that's removed, things could get far worse.

Similar to you, I once allowed a chap with an IVA to let my property, but did extensive due diligence and met him at his home with his parents (full guarantors) and got full details of the issue (the debts were run up by his former wife). He proved to be an excellent tenant, so I agree it can work out when you take a chance on someone.

However, the legislative and economic environments are now so much tougher for landlords, why take a risk unnecessarily?

Avoid any person with failed refrencing check no matter howmuch they pay. You cannot get any rent insurance cover and the default is definite. The cost of eviction is enormous. This 6 months is just a trick !

The guarantor needs to be on the tenancy from the start otherwise what guarantee do they give? They might change their mind. Why not do a 6 month AST if you're getting 6 months rent?

I think you need some professional advice

From my point of view, it is not always possible to get a guarantor, So I understand your thoughts, but times have changed, all my insurance's now refuse any assistance if a credit check is not obtained and passed, which is funny to me as one tenant has been in the property and never missed for over 30 years.
A guarantor is never for a limited time, it is for the length of the tenancy, if they are seeking to limit their term or liability that is a red flag, the hook being 6 months cash upfront...
Sometimes you have to go with your gut. In these modern times the bean counters do not like risk.
Please update us on your decision!
Thanks Chris