First time landlord guarantor question

jeffbadger

Hi all,
My girlfriend and I are in the process of moving down to London from Liverpool and are looking to rent our house out privately. We're currently going through the process with someone with a young child and her boyfriend. It turns out that, contrary to what we though, that the boyfriend won't be living with her but will be contributing to rent. She's on a pretty low income and couldn't afford it on her own. I think the only way we could do it would be to make the boyfriend guarantor (we think he's on a decent wage that would probably cover the rental). Is this an advisable thing to do or should be be running for the hills at this? What legal position would this leave us in should the couple split up? We're not in a position to be gambling on whether we'd get the money or not as we couldn't cover London rental costs and our mortgage and still have money to eat!
Would greatly appreciate any help in this matter.

jeffbadger

Another thought occurs to me - could we make him joint tenant and then it's up to him whether he lives there or not, at least he's responsible for the rent?

mchale

I would put him on the tenacy agreement (bear in mind she will lose the single person allowance on CT) & make sure you see some form of ID, i always take a digital photo of passport or driving lic & NI card number, and have rent paid by postdated cheques, also google their names, if you want a guarantor as well try and get 1 who is a home owner

tbs624

jeffbadger wrote: »

We're not in a position to be gambling on whether we'd get the money or not as we couldn't cover London rental costs and our mortgage and still have money to eat!

Then you should sell it, not rent it out - if you are letting property out you *need* to have a contingency fund - what happens if the boiler breaks down, roof repairs are needed etc? You can't say to a tenant, I have no money for that at the moment

Even if you have a guarantor,this doesn't mean that you might not have several months with no rent coming in: if a tenant doesn't pay the rent you can still wait a considerable length of time to get your money from either the tenant or his/her guarantor: you may even have to go via the courts to get judgement, and then there is no guarantee that you can always get payment enforced.

If you still want to go ahead with it all get the tenants properly credit checked at rentcheck, tenantverify or via the Residential LL Association or similar services and then look at rent guarantee insurance. As mchale says ,any guarantor should themselves be a homeowner. Do bear in mind that NI cards are not intended as identity cards,and if you store/process other personal data you should comply with the rules about safeguarding it and only keeping it for as long as is strictly necessary.

jeffbadger

Sorry, suppose I should clarify my position. We have money enough to pay for repairs and are fully covered by buildings insurance, boiler maintenance and servicing and individual appliance insurance.
What I was trying to get at was we want (as I suppose all landlords do) to avoid any real risk of having to wait months for someone to pay up. If this is the reality of a situation with a guarantor then I suppose it's not right for us at the moment and perhaps having the boyfriend as joint tenant would be the correct approach?
Thanks for the links to credit checks, am using tenant verify for comprehensive checks etc so should be ok for those.

neverdespairgirl

jeffbadger wrote: »

We're not in a position to be gambling on whether we'd get the money or not as we couldn't cover London rental costs and our mortgage and still have money to eat!
Would greatly appreciate any help in this matter.

Renting it out at all if you can't cope with voids / damages / emergencies is a very, very risky idea.

jeffbadger

Again, sorry, just to clarify - have contingency and insurance for any problems or short term vacancies once this first 6 month contract has been served as new job will pay enough to save for any problems.
My main concern is whether this situation of someone paying the rent not living there permanently is ok or something to be avoided?

sooz

If you have any doubts, it's best to listen to your initial instinct.

Don't feel sorry for any potential tenant, & sign them up knowing that they alone are unable to pay the rent. This is a terrible way to start a professional relationship and a business.

Whilst tenants can always experience a change in circumstances, don't start off with someone who cannot afford the rent.

Re-advertise, use a referencing company for a full check & if you are worried, take out the rent guarantee insurance (this would usually be through the same company as the references).

My best advise would be to join a LL association, who can offer you lots more advice, free access to forms, & discounts on referencing, amongst other things.

jeffbadger

Thanks Sooz - I think that was what I needed to hear! Do have doubts, just wanted to be sure I wasn't being overly harsh and that this wasn't a common situation that I would just have to get used to.