Lettings management platform, Alto, questioned 250 estate and letting professionals and discovered a 33% increase in guarantor requirements over the past year.
Their research also found that 11% of the professionals reported a rise across their portfolios. Property 118 says, “The change is emerging as borrowing costs remain high and the Renters’ Rights Act gets closer.”
Why the increase in requests for rent guarantors?
Due to all of the changes ongoing within the rental system, landlords are nervous and therefore are adhering to guidelines better than before as well as tightening tenant requirements. Stricter requirements, mean landlords are less likely to be let down by the unpredictability tenants.
Alto’s chief executive, Riccardo Iannucci-Dawson, said: “Higher borrowing costs, regulatory reform and longer eviction timelines all change the risk equation.
“When landlords feel they have less room for error, they look for additional safeguards.”
He added: “Guarantors are increasingly seen as a financial safety net but this also adds complexity for agents.”
Renters’ Rights Act and possession court delays
The latest Agency Trends Report by Alto highlights that the removal of Section 21’s will lengthen the possession route, replacing it with a more complex court path.
London sees landlords facing the highest loss on average with £27,436 per possession case. With landlords already facing long waits before the Renters’ Rights Act has come into full force, it is expected that possession court delays are going to increase further after the implementation in May.
Stability from guarantors
According to Property118: “guarantors are being used more often where affordability is stretched, or tenant profiles are less certain.
“Government data shows possession claims still running above pre-pandemic levels, while arrears pressures continue to affect tenants facing higher living costs.
“At the same time, rents have risen over the past two years, lifting the financial thresholds applicants must meet.”
