Renting - guarantor needed!

AMILLIONDOLLARS

I came across this problem this week. I was looking for a rental property for my Nephew and his son. Unfortunately, the DSS will be paying the rent. In ringing around, I was told by one well known Estate Agent in my area, that the landlords on their books will only tak on a DSS renters, if a home-owner in the UK will sign as a guarantor on that's person's behalf:eek:. Well I for one will not be putting my house on the line, family or not, should the DSS mess-up. Sounds like some BTLers now want their cake and want to eat it.

Has anyone else come across this stipulation?

AMD

Agbe

Yes - not just when I was on benefits but also when I was a student.

I thought the requirement for a guarantor for a tenant who isn't working was just standard?

chickmug

AMILLIONDOLLARS wrote: »

Well I for one will not be putting my house on the line, family or not, should the DSS mess-up. Sounds like some BTLers now want their cake and want to eat it.

Why should a LL take the risk when even you will not take it (the risk) for one of your family. Being a LL is not a charity. I am one.

Agbe

But would you really be "putting your house on the line"? As far as I can remember, it's just to make sure that if the tenant fails to pay his rent, they can go to you to cover it. Since the benefits people can (but don't always) take about six weeks to process things, the guarantor may well have to cover the rent until it's all sorted. This is what happened to me - my father paid the rent until the claim was all done, and then the benefits people paid me a lump sum covering the previous weeks, which I transferred directly to my father's bank account.

Jowo_2

AMILLIONDOLLARS wrote: »

Well I for one will not be putting my house on the line, family or not, should the DSS mess-up. Sounds like some BTLers now want their cake and want to eat it.

Has anyone else come across this stipulation?

AMD

You may prefer the landlord to put their rental property on the line instead of you taking responsibility for the behaviour of your relative but the LL will simply find someone else who is willing to support a tenant at their expense, rather than risk the loss of their property through a poor tenant.

LHA tenants are considered one of the riskiest groups to give a tenancy to and the request for a guarantor is very common to transfer the risk from the LL back onto the applicant. This request is also common for students, too.

Unlike HB, its replacement LHA is now paid directly to the tenant rather than the landlord and this has reduced the number of landlords willing to let to claimants as this is seen to make it more likely that the claimant will go into arrears.

The system is also notoriously slow at paying but this is the claimant's problem - in the meantime, the landlord still has mortgage costs, repair expenses, the letting agent and the taxman to pay.

Agbe

Although LHA is paid directly to the tenant, the tenant is perfectly free to request that it be paid directly to the landlord/agent. If your nephew is willing to do this, it may help a little? All he has to do, when filling out the form, is stipulate that this is what he wants.

Jowo_2

Agbe wrote: »

Although LHA is paid directly to the tenant, the tenant is perfectly free to request that it be paid directly to the landlord/agent. If your nephew is willing to do this, it may help a little? All he has to do, when filling out the form, is stipulate that this is what he wants.

Yes, the tenant is free to suggest this but council's will only accept the request if the tenant can provide evidence that they are vulnerable and can't manage their money. For example, that they have learning difficulties.

Under HB, a tenant could direct the payment to the landlord which many landlords made a condition of granting the tenancy but this has been removed under LHA and is one reason why landlord's are now demanding guarantors.

Agbe

Aah - didn't know that. Seems a bit crazy, though, that the council won't accept the request if it's what both the tenant and the landlord want, even though the tenant isn't "vulnerable".

Jowo_2

Agbe wrote: »

Aah - didn't know that. Seems a bit crazy, though, that the council won't accept the request if it's what both the tenant and the landlord want, even though the tenant isn't "vulnerable".

With apologies for the OP for going slightly off topic...

The reason why the LHA is paid to the recipient instead of to the landlord is expressly so they can take responsibility for budgeting, self-empowerment, promote choice and so forth. That's the reasons given by the government why this change happened to replace HB with LHA.

That's the theory but as landlords cannot get the rent paid to them directly unless the tenant is vulnerable or the tenant is 8 weeks in arrears, landlords now need additional protection which is why they've either withdrawn from letting their properties to benefit claimants or require a guarantor.

The OPs attitude that they aren't prepared to take the risk of their nephew defaulting shows why it is that landlord's are averse to being considered a branch of social services - if their families don't trust them, why they should they? An alarm bell immediately goes off when a landlord finds that a tenant's family and friends could be guarantors but won't.

If tenants want socially responsible landlords, there's always the council or Housing Associations (who, incidentally, are exempt from the LHA regulation suffered by private landlords because they receive the LHA directly instead of the tenant).

AMILLIONDOLLARS

[Quote: The OPs attitude that they aren't prepared to take the risk of their nephew defaulting shows why it is that landlord's are averse to being considered a branch of social services - if their families don't trust them, why they should they? An alarm bell immediately goes off when a landlord finds that a tenant's family and friends could be guarantors but won't.[Unquote]

With social housing in short supply, surely more DSS people will be looking to rent. Yes, I wouldn't want to sign as a guarantor, First the monthly payment would be more than my mortgage, and secondly my income could not support paying both mortgage and rent for someone else, especially if it took the council sometime to sort the matter out.

It all about affordability, and the fear of losing their own home due to the incompetence of the DDS!! I would not dream of signing as a guarantor unless I knew I could guarantee payments in an emergency, its a very dangerous thing to do, you could lose your home if you don't keep up the payments!

Seems like Landlord want a risk free investment! Good luck to them, but with so many going to the wall, I wonder how long they will hold out with their properties standing empty. A hugh chunk of Housing Benefit is paid out to private landlord, maybe this money should be used to start building social housing again.

In the meantime, I am going to advise my nephew to go into emergency housing, hopefully with a child he could be fast tracked into permanent housing.

AMD

Agbe

But if you're not prepared to take the risk yourself, on behalf of a family-member, why should a landlord be expected to do so?

Your nephew won't lose his home - if he is entitled to benefits then he will get them. And they will be backdated.

Don't get me wrong - I have every sympathy with those in his position, and I know just how frustrating and depressing it can be. But I really don't think that a demand for a guarantor is unreasonable. If you can't afford to loan him the money whilst the benefits people sort it all out, then you can't, so being his guarantor is not an option. But I should imagine there are quite a few private landlords who can't afford to allow a tenant to live rent-free for that period, either, even though they know they will be getting the money back eventually (just as a guarantor would be).