Being a Guarantor for my Ex!

BeingThere_2

Sounds crazy right? I'll keep this explanation as short as possible - the condensed version!

My partner and I have 1 child together and she has 1 child from a previous relationship. All 4 of us live in the same rented property. We separated a few months back and are still living together.

The plan is that she moves out with the kids and I'll go find my own place. I work. She'll be on Housing Benefit. The plan is good... except everyone keeps asking her for a guarantor!

Now, for one reason or another, all of her family members are unable to do this. She has a friend that was willing to do it, but he has recently moved away. The choices seem to be

1. We find a landlord that doesn't require a guarantor
2. I be the guarantor

I have no ill feeling at this point and want only what's best for her and the kids but I have obvious reservations. I'll address both points below

1. We have found a property that falls below the Housing Benefit payment (HB is £625 p/m - we've found one for £600)
a) If HB was paid directly to the LL there's no need for a guarantor, right?
b) If the LL was to get the full HB (i.e. an extra £25 p/m) might they waive the need for a guarantor?

2. With this option I'd want to limit myself up front, and demand the following in the guarantor's contract
* The guarantor agreement will be limited to the 6 month fixed term only and will need to be renegotiated at the end of that term (I will not guarantee the murky area of a rolling contract)
* The guarantee will not be secured on any of my assets
* The guarantee will be limited to rent arrears only and will not apply to damage to the property (or limit damage to 1 month's rent)

Also
* If HB cannot be paid direct to the LL then I'd require her to set up a separate account that HB is paid into and has an SO to LL - I'd ask her that I have access to check that no other transaction have taken place on that account (I understand that I will have no legal access to the account - I won't become a joint account holder for credit profile reasons - but unless this access is upheld I will not continue to be her guarantor on the next tenancy renewal)

a) Does this sound reasonable from a landlord's POV?
b) Does this sound reasonable from her POV?
c) Is there anything I've missed, or any way of mitigating or limiting my risk further?
d) Will being a guarantor cause my credit profile to be associated with hers? (Her credit history is very poor; mine has been average for a while but is slowly improving)

Please bear in mind, that
* I want only the best for her and the kids
* While she is useless with money and has screwed up in the past - she's not particularly vindictive and knows full well that guarantor or not, any missed payments will likely result in the landlord kicking her out after the initial 6 month contract - the requirements above are really intended to stop her screwing up
* The home situation is becoming unbearable on a daily basis and the kids are being affected by it - the sooner this ends the better - I have a responsibility as a father and am willing to make short term sacrifices to reach a long term resolution

Also, I will be consulting a FA and a solicitor before doing anything - just wanted a rough consensus on the issues first.

Jeez - that was the condensed version!

monty-doggy

My partner did this or his ex and HB wouldn't pay LL direct and surprise surprise it never got paid on time if at all. There was always an excuse of something the kids needed came out first and made the DD bounce. It was a nightmare. Why can't she stay put and you move out?

sandsni

Since benefits can be adjusted or removed at any time the LL may still require a guarantor for your ex. Are you sure you would be suitable as a guarantor as they will want to know you have the means to support yourself AND pay your ex's rent should the need arise (therefore the criteria for being a guarantor would be higher than just the normal credit check). Obviously it depends on how thorough the LL is in checking, but I wouldn't be keen on taking the risk in those circumstances.

Would your ex be willing to ask someone for help in becoming slightly less useless with money? CAB for example? If she knows you're going to be there to bail her out she may not have the incentive to make sure rent and household bills are her priority.

Only agree to be a guarantor if you're prepared to pay rent for both your new place and your ex's new place for the full fixed term of the contract as you will be liable if she screws up. Even if she gets evicted the LL could still claim from you for money owed, not just for rent but for damages etc. to the property.

Yes, you have responsibilities as a father, but underwriting your ex's bad financial choices isn't one of them. Your child will be worse off if you end up in the !!!! too.

BeingThere_2

@monty-doggy
Unfortunately our current LL has stipulated that she only wants couples in the house (personally I think she doesn't want HB plus I negotiated her down on rent 2 years ago and she could get a lot more for it on a fresh contract). Regardless of the reasons - the LL has said that if one of us goes we both do. Not much more to say there.

The problems of excuses like "the kids needed X" etc are my main concern. This is why I want it in a separate account that she would have to go out of her way to amend things on once set up. It's worth mentioning at this point that other requirements I didn't previously mention are
* The account would have to be 'administerable' only in branch (no internet or telephone administration)
* Not with a bank that has a branch in our local town (HSBC, Santander almost all building societies)
* Doesn't have a cashcard or cheque facility (no ATM access)

That way things would work automatically and she would have to be very deliberate to disrupt it. To reiterate - I will not be a guarantor if the HB and rent is going through her current account.

Also this would only be for 6 months after which time my liability is over if she doesn't prove herself. After that I'll require another 6 month contract to be signed again.

monty-doggy

I understand your concerns and if you manage to do it the way you suggest, it would seem that she would have to run through hoops to access the money. Part of the problem with my OH ex was that HB is paid two weeks in arrears, and paid fortnightly so she could never budget properly.

Has she tried to get council or association housing? It will be much cheaper than private rent and given she has children she should jump to the top of the list?

BeingThere_2

@sandsni

You're quite right, benefits could be adjusted or removed, I hadn't thought of that. I'm assuming they won't change drastically in the next 6 months at which point this whole things will be up for review.

The problem of actually covering the finances in the event of adversity has arisen, and in reality I really couldn't afford to pay her full rent and my own each month. It would be a problem for me but the pales in comparison to her problems if she stopped paying rent. i.e. she'd be running the risk of making the kids homeless.

However, she's not a spiteful person and she's well aware that deliberately not paying rent is likely to put the kids' home in jeopardy. Plus as mentioned before she'd have to go to some lengths to disrupt the flow, I don't want a situation where this can happen by mistake and I don't think she'll go to those lengths knowing that homelessness for her kids would be a real option.

Is it possible/feasible/likely that the LL will agree to my only having limited liability for costs and damages (say limited to 1 month's rent)? Again there's no point in promising the LL what I can't afford.

I agree that protecting myself from her poor financial choices is best for the kids. I wish she'd see it that way, it comes across as selfish but that's a hat I'm willing to wear for now!

BeingThere_2

@monty-doggy
Yes, the dates and workings of the HB payments and SO for rent would need to be worked out with me in advance. Plus they'd go through the separate account. So as long as they tot up OK in the spreadsheet then there shouldn't be any need for her to budget.

I've agreed to put up the first month's rent and deposit (I'll keep a record of the financial transactions) and she's agreed to pay me back over the months, so the first month's rent is taken care of in advance. I wish there was some other way but there really isn't anyone else that can lend this sort of financial support to her.

We've tried council and housing association but there are problems with relocation. One child needs special care in school and the school he's at is doing an amazing job. Relocating the kids would be extremely disruptive and, due to circumstances I can't discuss, it would likely be very damaging for them. It's a very last resort.

The HA and council haven't been able to find housing in the school catchment area, plus they won't do much until they have confirmation that the tenancy agreement has ended; a step that would severely time-limit our options.

There are housing options we're exploring other than private but I'm not holding my breath!

monty-doggy

In that case I'd do it but just be cautious. It's a horrible situation and so many people would tell you not to do it but you have to do what you feel is right by your kids.

Even after what my OH ex did to us, we still help her out all the time. She lost the rented house and is now living in the house my OH owns because she has nowhere else to go. She pays the mortgage but has defaulted 9times in 18 months.
It's a crap situation but sometimes you just have to live with things and make the best of a bad situation. Least this way we know that the kids are warm and safe. And now she knows how close the house came to repossession she won't miss a payment again.

Perhaps your ex will realise its your terms or end up in a hostel and be appreciative and compliant of it?

Dunroamin

HB/LHA isn't paid directly to the LL in normal situations, neither does it pay more than the actual rent.

BeingThere_2

@Dunroamin
Thanks for that I wasn't sure if they just paid the £625.

Could we agree with the landlord that he increase the rent to £625 and then be lenient with the guarantor contract terms? He'd have an extra £150 over 6 months after all!

Or do HB look at the rent as originally advertised?

BeingThere_2

@monty-doggy

Yes, fundamentally it's a bad situation, there is no easy way out and everyone will need to sacrifice something. I could of course just be a **** and walk away - but I'm not that guy.

I think she realises how much I'm trying to help her and that I'm not trying to burn her. And so long as she knows that the time limit on my help is 6 months at which time everything will be reconsidered then hopefully she'll stay in line.

That being said I still have 2 burning questions

1) Is it likely that a LL will accept limited liability on damages from me as a guarantor (e.g. limited to £600)?

2) Does being a guarantor create a financial association on my credit profile?