risks in acting as guarantor for tenant

Baalmaiden

My son wants to rent a studio flat but is on housing benefit. The agancy will only do this if he has a guarantor who is a houseowner. If I act as guarantor, what is the risk of me losing my house? Waht other risks are there?

BigAunty

The risks are that you end up being responsible for all the rent throughout the whole term of the tenancy, ending in debt and being chased for it if you son gets into rent arrears or damages the property.

Then the other risk is a family relationship breakdown caused by this.

Is your son in employment? Is he living at home or moving from elsewhere?

How old is he? Those under the age of 35 are only entitled to a shared property rate of housing benefit (Local Housing Allowance) and it rarely stretches to cover the cost of a studio or 1 bedroom property. Find out what the maximum LHA is for his entitlement versus the rent charged. The local council website should have this info, if not the Direct Gov website.

Johnhowell

Also, what are the conditions to allow you to terminate being guarantor? Seen several messages on this topic after the tenancy has started and there never seems to be "get-out" clause. Maybe suggest only being guarantor for the fixed term (6, 12 months) and not during the periodic tenancy.

Are you only resposnible for the rent, not any other bills/damage caused by tenant.

Good luck,
John

Judith_W

You'd be doing your son a favour if you told him no, and got him looking for a room in a shared house.

Being a guarantor essentially means you will be liable to pay anything and all that he owes, this is not helping him become independent and I have heard many a horror story of families being split apart from the nightmare that this can cause. Don't do it!

Rather work with him to understand what he is eligible for, where he could rent without a guarantor, how much bills are and what he would have to pay for e.g. utilities, food etc. and help him set up a budget.

BitterAndTwisted

The potential liabilities are almost without limit. You will be guaranteeing the rent and the cost of any damage for as long as the tenancy continues, not just for the initial fixed-term. This needs to be signed as a Deed and a lot of agents and landlords get this wrong.

I cannot think of a single friend or family member who I would be willing to act as guarantor for. And not a single one of them is particularly irresponsible or an outright rogue. Misfortune could visit any one of us and a person does not need to be at fault to suffer that.

If the Deed of Guarantee is correctly written up and there are rent arrears you could risk being exposed to cover very large sums, so please think very, very carefully.

My own opinion is that folk who are given things without very much effort on their own parts don't always place much value on them. Much better for this young person to get their own privately rented accommodation under their own steam using their own resources, even if that means they do what most young people must and rent a room in a shared flat or house. Or come up with several month's worth of rent as a loan or even gift if you must.

missile

You would be safer renting the property in your name and sub-letting to your son. If you are able to do that it would limit your risk and if necessary you can terminate the lease.

BigAunty

missile wrote: »

You would be safer renting the property in your name and sub-letting to your son. If you are able to do that it would limit your risk and if necessary you can terminate the lease.

I can't see many landlords willing to issue a tenancy agreement to someone who doesn't live there and agreeing for them to sublet it to a complete stranger to them, there's a significant loss of control of the tenant verification process. I also don't know the legal position on this, whether this is legitimate.

dimbo61

As a parent I have had to sign as a guarantor for my son at his private uni hall of residence.
If he moved into a private house I would also have to sign as a guarantor for that as well.
most student landlords want guarantors as students have little if any credit history and have never lived away from home so how do they get references from existing landlords ?
You know your son and need to make the desision if you want to help him rent his first home !

HB58

dimbo61 wrote: »

As a parent I have had to sign as a guarantor for my son at his private uni hall of residence.
If he moved into a private house I would also have to sign as a guarantor for that as well.
most student landlords want guarantors as students have little if any credit history and have never lived away from home so how do they get references from existing landlords ?
You know your son and need to make the desision if you want to help him rent his first home !

I was going to say a very similar thing.

BigAunty

dimbo61 wrote: »

...
You know your son and need to make the desision if you want to help him rent his first home !

True, but we do see lots of posts here from guarantors who have been gravely disappointed by the behaviour of friends and relatives who they sought to help and the expense it has caused them.

Baalmaiden

Thanks folks, my son is 35 and has a disability so is not working and could get housing benefit to cover the amount for a studio flat. If I rented the place he would not get housing benefit. As a HB tenant the renting agency will not let without a guarantor. I think the suggestion of a short term arrangement may be best but I am not rushing into anything. Any other suggestions would be welcome.