Collecting rent from tenants and ensuring that monthly outgoings are covered is understandably the biggest concern for a landlord. There are two popular options, a rent guarantor or rental guarantee insurance, which can be implemented at the start of a tenancy agreement to support both tenants and landlords, by underwriting any financial losses incurred if a tenant defaults on their rent.
The terms ‘rent guarantor’ and ‘rental guarantee insurance’ are easily confused by many people, including landlords. Despite sounding very similar in name, and both addressing the same issue, they have entirely different meanings. Below is a helpful comparison of the two, so that you can decide which best suits your circumstance.
What is a Rent Guarantor?
It is very common in the UK for landlords to ask for a rent guarantor. This is someone (usually a parent, guardian or third party service) who agrees to take joint responsibility for the rent if there are any issues with payments. A guarantor will cover any rent arrears that the tenant doesn’t pay, which includes any damages amounting to more than the deposit. Generally speaking, if you are unable to provide a UK rent guarantor, you will be required to pay some or all of the rent for your tenancy agreement upfront.
What is Rental Guarantee Insurance?
Rent insurance is not a guarantor, it is an insurance policy. This can be purchased by the tenant and then co-joins the landlord in the policy. Rental guarantee insurance will ensure that a landlord gets paid when the tenant defaults. However, similarly to other insurance policies, tenants will have to meet certain conditions, have passed reference checks and provide a deposit, and if anything is missed there is a risk that the insurer won’t pay.
Know the difference:
Due to a variety of circumstances, often prospective tenants, both students and professionals, find themselves in a position of not being able to secure a guardian as a rent guarantor. This is where our services are here to help, however, it is important to understand the differences between a rent guarantor service like Housing Hand, and rental guarantee insurance:
Rent Guarantor Service:
- Prevents having to pay rent up-front
- Guaranteed rent for the whole of your tenancy
- Affordable fees are taken directly from the tenant and spread across the months
- Co-signer required – What is a co-signer?
- Housing Hand guarantees to payout within 28 working days of an invoice receipt
Rental Guarantee Insurance:
- An insurance policy as opposed to a guarantor
- Can be taken out by either the tenant or the landlord
- Sometimes is a cheaper option, but often has less of a payout, more T&C’s and a much higher risk when dealing with the technicalities of an insurance policy
Tips on finding a Rent Guarantor
Talk to the landlord or letting agent
Have an open discussion with your landlord or letting agent about your situation. Be honest about your circumstances and talk about your options.
Students – Ask your University or College for support
If you’re a student who is unable to get a guarantor, your University or College is there to support, and offer you advice.
Private Guarantor Services
As mentioned above, services like Housing Hand are here to help should you find yourself in a situation where you are unable to secure a rent guarantor. Whether you’re a student, professional, from the UK or any other part of the world – Housing Hand provides an affordable service with a simple process that helps guarantee you your dream home.