Tenant Histories / Guarantors
I’m currently using another tenant referencing company who claim that they provide a Tenant History service – do they?…
I wouldn’t call it a tenant history, more like a ‘tenant opinion’…! The quick answer is no.
I am really worried that the way other referencing companies are describing these reports are misleading growth within the industry, by misrepresenting what a tenant history report actually is. These companies have gathered their tenant histories directly from the tenant. The difference between them and TenantReferencingUK is that our Tenant History Report is the data that has been gathered directly from our member Landlords and Letting Agents about their tenant and/or applicant tenant and can only be obtained from TenantReferencingUK.com.
DON’T BE MISLEAD! Read more about this concerning issue by clicking here.
My tenant has a good credit score but doesn’t show the industry affordability. Can I offer him a property by obtaining a guarantor?
Affordability is the key factor to offering a tenant a property. So in simple terms if a tenant cannot show that they can afford to pay the rent and support their lifestyle, then the likelihood is that the rent will not be met; either in part or full.
Industry recommendation is currently a multiplication of earnings relative to 30 times the rent. So for example: if the rent is £500 per month, a tenant must earn a minimum of £15,000 a year to meet the rent payments successfully. Of course this is not an exact science, as some live more extravagantly than others, but over the years we have found that this is a very safe guideline to work with – and it is one of the recommendations for rent guarantee insurance that we do not bend. It is a misconception that affordability can be overridden by offering a guarantor. A guarantor is used as the lien to cover indebtedness created by the tenant and should not to be used to subsidise the shortfall in rent.
We are aware of companies that do offer to take tenants with a lesser income than the industry recommendations, using a guarantor as a means of security. However at TenantReferencingUK we believe that the best security is making sure the tenant can afford the rent on their own from the outset.
FURTHERMORE it’s also worth bearing in mind that if a referencing company didn’t work to the industry recommendation and approved a guarantor, the guarantor could argue further down the line that they should never been offered such a position. This is because the referencing company should have known that the contract would be breached if the tenant couldn’t meet the affordability criteria in the first place. So in theory, a judge could then strike out the contract on the basis it should never have been drawn in the first place.
A related referencing story: FCC Paragon passes tenant with IVA – click here to read in full.
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