What is a Guarantor and Who Can Be One?

A guarantor is someone who legally promises to pay your rent, loan, or mortgage if you can’t. Almost anyone over 21 with good credit and sufficient income can be a guarantor, but it’s a serious financial commitment that could affect their credit score and future borrowing if things go wrong.

Whether you’re trying to rent your first home, get a loan with limited credit history, or someone has asked you to be their guarantor, understanding this important financial arrangement is crucial. This comprehensive guide will walk you through everything you need to know about guarantors in 2025.

What Is a Guarantor?

A guarantor is someone who agrees to pay your rent if you do not pay it. They sign an agreement which has their responsibilities and when they have to pay.

In simple terms, a guarantor is a person who “guarantees” someone else’s financial commitment by promising to step in and make payments if the original borrower or tenant cannot. This legal arrangement provides security to lenders and landlords while helping people with limited credit history or income access rental properties, loans, or mortgages.

Types of Guarantor Arrangements

Rental Guarantors Being a guarantor for a rental property involves you vouching for the tenant. If the tenant is unable to meet their obligations under the tenancy agreement, you (the guarantor) will be legally bound to pay out – either for overdue rent or damage to the property.

Loan Guarantors For loans and mortgages, guarantors help people who might struggle to get approved by lenders – for example, young people with limited credit history or those with poor credit scores.

Common Scenarios Requiring Guarantors:

• First-time renters without rental history
• International students or workers new to the UK
• Young people with no established credit history
• Self-employed individuals with irregular income
• People on benefits or low incomes
• Those with poor credit scores

Who Can Be a Guarantor?

Almost anyone can be a guarantor. It’s often a parent or spouse (as long as you have separate bank accounts), but sometimes a friend or relative. However, you should only be a guarantor for someone you trust and are willing and able to cover the repayments for.

Basic Requirements

To be a guarantor you’ll need to be over 21 years old, with a good credit history and financial stability. If you’re a homeowner, this will add credibility to the application.

Essential Criteria:

• Age: Between 21 and 75 years old
• Residency: Must be a UK resident (landlords will usually want a guarantor who lives in the UK, as it’s easier for them to take legal action against a UK resident if they need to)
• Credit History: Good credit score and clean credit report
• Financial Stability: Sufficient income or savings to cover payments
• Legal Capacity: Mentally capable of understanding the commitment

Income Requirements

The amount a guarantor needs to be earning will depend on how much rent would need to be covered if there was a claim. As a guide, letting agents or landlords will only accept guarantors that earn three times the annual rental.

Typical Income Thresholds:

• Rental: Most landlords typically require a guarantor to have an annual income of at least 40x the monthly rent
• Alternative calculation: Three times the annual rent (£36,000 annual income for £1,000 monthly rent)
• Some landlords: May accept guarantors earning 30x monthly rent in certain circumstances

Do Guarantors Need to Be Homeowners?

Most letting agents and landlords say that a guarantor needs to be a homeowner. This gives the landlord the added security that the guarantor has fixed assets to call upon in the event of a claim and that he or she cannot simply “up sticks” and disappear.

However, being a homeowner is not a legal requirement. They confirmed guarantors do not need to be homeowners, but must be proven to have a good income. Some landlords will accept non-homeowner guarantors if they:

• Have excellent credit scores
• Earn significantly above the minimum threshold
• Provide additional security (such as extra rent in advance)
• Have substantial savings or liquid assets

Who Can Be Your Guarantor?

Family Members

Parents are the most common choice for guarantors, especially for young people. Often, parents will act as guarantors for their children, to help them take that first step onto the property ladder.

Other Family Members:

• Siblings (if they meet financial criteria)
• Grandparents with sufficient pension income
• Aunts, uncles, or other relatives
• Adult children for elderly parents

Non-Family Options

A guarantor does not have to be related to the tenant. In reality though, parents or other close family members are most likely to agree.

Friends and Acquaintances:

• Close friends with stable finances
• Colleagues or business partners
• Mentors or sponsors
• Anyone willing to take on the financial responsibility

Important Note: It can be anyone who is prepared to be the Guarantor and who meets the criteria required by the landlord or agent. In the case of most students it does tend to be a parent or family member, because they are the most likely to accept the substantial financial commitments of being a rent guarantor.

Can Specific Groups Be Guarantors?

Retired People and Pensioners

A guarantor can be retired. People are judged on their financial status, it is not a requirement for that to come from a working salary. Pensioners or people who are retired can act as guarantors but generally they are required to show they have a regular income or sufficient liquid assets.

Acceptable Income Sources:

• State and private pensions
• Pension drawdowns
• Part-time earnings
• Investment income
• Substantial savings accounts

Self-Employed Individuals

A guarantor can be self-employed. As long as they are able to show that they have a regular income and pass an affordability check then they will be eligible.

Additional Requirements:

• Accountant’s reference verifying average earnings
• Multiple years of accounts
• Proof of consistent income
• May need higher income threshold due to perceived risk

Spouses and Partners

Spouses can be guarantors, but there are important considerations:

• Must have completely separate bank accounts
• Cannot guarantee for each other in most lending scenarios
• Each person’s finances are assessed independently
• Some lenders specifically exclude spouses/partners

What Are the Responsibilities of a Guarantor?

Financial Obligations

Primary Responsibility: If you don’t pay your rent, the Guarantor will be required to pay it. Depending on the tenancy agreement, it can also mean that the Guarantor is liable for any other costs, such as damages and even the rent due from other occupants of the property.

When Guarantors May Be Called Upon:

• Missed or late rent payments
• Property damage beyond normal wear and tear
• Breach of tenancy agreement terms
• Early termination costs
• Legal fees and court costs

Joint Tenancy Complications

If you share accommodation with other tenants under one tenancy agreement, that is, a joint tenancy, it’s common for the guarantee to apply to all of the rent, and not just your share.

Important Consideration: Each parent could be responsible for the whole rent unless they have an agreement which says they only have to cover their child’s share.

Duration of Responsibility

There’s no general rule about how long a guarantor agreement lasts. It depends on what the guarantor agreement says.

Typical Scenarios:

• Fixed-term agreements: Usually cover the initial rental period
• Open-ended agreements: May continue indefinitely until properly terminated
• Renewal situations: Often require new guarantor agreements

What Happens If You Need to Pay as a Guarantor?

The Process

The landlord can contact a guarantor to recoup unpaid rent from the day after it falls due. The guarantor is not legally required to pay anything until they have been asked by the landlord or agent.

Before Legal Action

• Landlords should contact the tenant first about problems
• Many situations can be resolved through negotiation
• Mediation services may be available
• Payment plans might be arranged

Legal Consequences

If neither the tenant nor guarantor pays what’s been agreed, the landlord could apply for a county court judgment (CCJ) against either or both parties.

Credit Impact:

• If the tenant keeps up payments: No impact on guarantor’s credit
• If guarantor has to pay: Will appear on their credit report
• Failed payments: Will damage the guarantor’s credit score
• CCJs: Remain on credit file for 6 years

Alternatives to Personal Guarantors

Professional Guarantor Services

If you do not have someone who can act as a guarantor for you, you may still be able to rent the property if you pay some or all the rent in advance, or if you use a guarantor company.

Popular Services:

• Housing Hand
• Your Guarantor
• Homeppl Guarantid
• UK Guarantor

Benefits:

• No personal relationships at risk
• Professional service standards
• Often accept lower income requirements
• Available for international students

Other Alternatives

Rent in Advance: If you can’t get a guarantor who lives in the UK, you might be asked to pay more rent in advance. Typically:

• 3-6 months rent upfront
• Entire year paid in advance
• Larger security deposits

Rent Guarantee Insurance:

• Landlord takes out insurance policy
• Covers unpaid rent up to certain limits
• Professional alternative to personal guarantors

Local Authority Schemes: Some councils and charities have rent guarantee schemes that:

• Give money to help with rent in advance and deposits
• Act as a guarantor service covering unpaid rent or damage
• Provide support for vulnerable tenants

Legal Protections and Unfair Terms

Written Agreements Required

There is a legal requirement for a guarantee agreement to be in writing. The agreement sets out the guarantor’s legal obligations.

Unfair Contract Terms

A term might be unfair if it creates a ‘significant imbalance’ between the parties to the agreement. If a term is held to be unfair then it cannot be relied on and has no effect in law.

Protection Available:

• Courts can rule on unfair terms
• Trading Standards can investigate complaints
• Citizens Advice can provide guidance
• Legal challenge may be possible

Negotiating Terms

It might be possible to negotiate with the landlord for a change to a guarantee agreement. This would ensure that the guarantor’s liability was confined to only your rent payments or any damage caused by you.

Possible Negotiations:

• Limit liability to specific time periods
• Reduce scope to tenant’s share only (in joint tenancies)
• Cap maximum liability amount
• Include termination clauses

Proposed Changes: Renters’ Rights Bill 2025

New Restrictions on Guarantor Requirements

A proposed new clause seeks to limit the circumstances under which landlords can request a guarantor. Specifically, landlords would be prohibited from requiring a guarantor if:

• The tenant has paid a tenancy deposit or has been assisted under a deposit scheme
• The tenant is required to pay rent in advance equivalent to one month’s rent
• The tenant’s income, including state benefits and any other lawful source, is sufficient to cover the rent
• Arrangements are made for housing benefit or the housing element of Universal Credit to be paid directly to the landlord
• The landlord has entered a contract of insurance against non-payment of rent

Liability Caps

In situations where a guarantor is lawfully required, the guarantor’s liability would be capped at a sum equal to six months’ rent.

Impact: These changes would significantly reduce the financial risk for guarantors while still providing landlords with reasonable security.

Before Becoming a Guarantor: Key Questions

Whether you’re considering asking someone to be a guarantor, or you’ve been approached by a family member or friend in need, you need to be aware of the possible financial risks.

Questions to Ask Yourself

About the Person:

• Do I trust this person completely?
• Why do they need a guarantor – bad credit history or no credit history?
• Are they likely to manage the repayments responsibly?
• How would our relationship be affected if I had to pay?

About the Financial Commitment:

• Can I afford to pay back the loan/rent if they can’t?
• Do they really need this property/loan?
• Could they save up instead or choose something more affordable?
• How long will my liability continue?

About My Own Finances:

• Would covering their payments affect my own mortgage applications?
• Could this prevent me from getting credit in the future?
• Do I have adequate emergency savings?
• Am I financially stable enough for this commitment?

How to Find a Guarantor

If You Need a Guarantor

Start with Family:

• Parents are most likely to help
• Explain your situation honestly
• Provide all the information they need
• Don’t pressure reluctant family members

Consider Friends:

• Only approach close, trusted friends
• Be clear about the financial implications
• Offer to provide additional security if possible
• Respect their decision if they decline

Professional Services:

• Research reputable guarantor companies
• Compare fees and services
• Check acceptance by landlords/lenders
• Read terms and conditions carefully

Making Your Case

Documentation to Provide:

• Proof of income and employment
• Credit report and score
• Bank statements
• References from previous landlords
• Clear explanation of why you need a guarantor

Building Confidence:

• Demonstrate financial responsibility
• Show you can afford the payments
• Explain your future financial prospects
• Offer additional security where possible

Tips for Guarantors

Before Signing

Review All Documents:

• Read the tenancy agreement thoroughly
• Understand the guarantor agreement completely
• Check for unfair or unlimited terms
• Seek legal advice if uncertain

Verify Information:

• Meet the tenant’s prospective landlord
• Visit the property if possible
• Confirm the tenant’s income and employment
• Check references and background

Protecting Yourself

Negotiate Terms:

• Try to limit liability to specific amounts
• Request end dates for your responsibility
• Ask for notification of any payment issues
• Include clauses for changing circumstances

Stay Informed:

• Request regular updates on payments
• Ask to be notified of any problems early
• Keep copies of all agreements
• Monitor your credit report regularly

Common Mistakes to Avoid

For Those Seeking Guarantors

Don’t:

• Pressure family or friends into agreeing
• Hide financial problems or risks
• Agree to terms you can’t afford
• Take the guarantor’s help for granted

Do:

• Be completely honest about your situation
• Provide all necessary documentation promptly
• Keep guarantors informed of any changes
• Maintain good payment records to protect them

For Guarantors

Don’t:

• Sign agreements you don’t understand
• Agree to unlimited or open-ended liability
• Ignore requests for information from landlords
• Assume the arrangement will never be used

Do:

• Get independent legal advice if needed
• Keep all documents safely stored
• Monitor the tenant’s payment behavior
• Know how to end the agreement properly

The Future of Guarantor Arrangements

Industry Trends

Professional Services Growth:

• More guarantor companies entering the market
• Better terms and customer service
• Technology making applications faster
• Increased acceptance by landlords

Regulatory Changes:

• Government considering restrictions on guarantor requirements
• Greater protection for guarantors being proposed
• Caps on liability amounts under discussion
• More transparency requirements likely

Technology Impact

Digital Solutions:

• Online applications and instant decisions
• Automated income verification
• Digital signatures and documentation
• Real-time payment monitoring

Conclusion: Making the Right Decision

Being a guarantor is a significant financial commitment that shouldn’t be taken lightly. If the borrower doesn’t repay the loan you will be legally responsible for paying the debt. Apart from the financial burden, these situations can sometimes end friendships or cause family feuds.

For Those Seeking Guarantors:

• Explore all alternatives before asking someone to guarantee for you
• Be completely honest about risks and your financial situation
• Consider professional guarantor services if personal options aren’t available
• Remember that this is a significant favor that deserves respect and gratitude

For Potential Guarantors:

• Only agree if you completely trust the person and can afford the payments
• Understand all terms and conditions before signing
• Consider the impact on your own financial future
• Don’t be afraid to say no if you’re uncomfortable with the arrangement

Key Takeaway: Both the borrower and the guarantor should think seriously about whether they can commit to maintaining the payments. While guarantor arrangements can provide valuable opportunities for those who need them, they must be entered into with full understanding of the risks and responsibilities involved.

Whether you’re a young person seeking your first rental property, a parent helping your child get started, or someone considering a guarantor loan, make sure you’re making an informed decision based on a clear understanding of what’s involved. The right guarantor arrangement can open doors to opportunities, but the wrong one can create lasting financial and personal problems.

Remember: This guide provides general information about guarantor arrangements in the UK. Always seek professional financial and legal advice for your specific situation, as individual circumstances can significantly affect your rights and obligations.