Acting as Guarantor

ERICS_MUM

I've been asked by a family friend to act as guarantor for a flat tenancy agreement. The first agreement is for a period of 6 months and thereafter 12 monthly.

I'm OK with it in principle, mainly because its rent rather than a bank loan or credit for buying a car etc. The rent will be paid by housing benefit direct to the landlord which reduces the opportunity for the tenant to squander it before paying their rent. .

I've worked out that my liability could be limited to 2 months rent - i.e. the first month the rent wasnt paid, and then a further month as the required notice before the tenant moved out.

Two questions please:

1. are there any pitfalls of which I an blissfully unaware ? PLEASE make me aware !!

2. will it be reflected on my credit file and would that reduce my chances of getting a mortgage (mortgage paid up on current house but looking to move in due course)

Thanks as always for your expert advice.

EM

SuzieSue

This is a useful thread:






https://forums.moneysavingexpert.com/discussion/4907141

poppysarah

ERICS_MUM wrote: »

I've been asked by a family friend

I'd just say there - that it's a huge risk. They could potentially fall our with you, get the rent paid to them and run up huge arrears whilst enjoying spending the HB money for a couple of months.
And then trash the place.

[Deleted User]

Please can you clarify what you mean by "12 monthly"? As a guarantor you're fully liable for all of the rent for the entire period, this means if your family friend enters into a 12 month tenancy and then does not pay the rent after the first month you're liable for the remaining period: 11 months not just one month because they can give notice and leave -- they can't if it's a fixed 12 month tenancy!

Regarding point 2, acting as a guarantor isn't going to show on your credit report however if your family friend does fail to pay and you can't afford to pay then it's very possible you'll be taken to court and end up with a CCJ, which will have a big negative impact on your credit worthiness.

BitterAndTwisted

This family friend could have their housing benefit cancelled or suspended for a number of reasons and three years of rent run up plus the property trashed. The first you will hear of it is when the landlord starts asking you for the money and if it's been signed as a Deed of Guarantee you will be fully liable. If you don't pay and it goes to court if a judgement is made against you and then you still won't pay, then that's the point at which it will appear on your credit-record.

Once that Deed is signed your liability will not be restricted a certain time-period but for the entire length of the tenancy. That could a year or a decade or longer.

There are members of my own family who I wouldn't dream of acting as Guarantor for. A family friend? Not a ruddy chance! Let their own family put their necks in that particular noose

eddddy

ERICS_MUM wrote: »

I've worked out that my liability could be limited to 2 months rent - i.e. the first month the rent wasnt paid, and then a further month as the required notice before the tenant moved out.

Hi Erics Mum

I'm not sure that it would be limited to 2 months. If the tenant stops paying rent, how would you make them leave the flat?

The LL might not care about evicting them, because they can get the rent from you. (Even if the LL does decide to evict them, if the tenant decides not to go, it could take many months.)

You will probably be 'guaranteeing' all the tenants responsibilities according to the AST, so you should read the AST to see what they are. (e.g. if the AST says the tenant should leave heating on in winter if the flat is unoccupied, to avoid pipe bursts... you could end up picking up the repair bill, if the tenant doesn't do this.)

And, of course, if the tenant wrecks the place... you could pick up the bill, as well.

But I'm definitely not saying that you shouldn't be a guarantor, but you should go into it with your eyes open!

spacey2012

Want some good advice ?
Lie and say you have too many of your own debts to act as Guarantor.

This is not somewhere or something you want to be mixed up in.

mrginge

ERICS_MUM wrote: »

I've worked out that my liability could be limited to 2 months rent - i.e. the first month the rent wasnt paid, and then a further month as the required notice before the tenant moved out.

Yes it *could*.

But it won't.

Should the 'friend' decide to stop paying rent, the LL is under no obligation to evict them. They just come after you for month after month after month....
And if the 'friend' decides to smash the place up, the LL just comes after you.

Don't consider it for a millisecond.

G_M

ERICS_MUM wrote: »

...
I've worked out that my liability could be limited to 2 months rent - i.e. the first month the rent wasnt paid, and then a further month as the required notice before the tenant moved out.

...

EM

You'v worked this out wrong.

Just because the tenant stops paying rent does not mean they will move out. Only the LL can make them, via the courts - you cannot.

Even IF the LL evicts, it could take 3 - 6 months, but far more likely the LL will simply leave the tenant there and come to you for the ongoing rent. For 6, 8 12, 24 months!

I assume you would also be liable for any damage to the property....

Lord_Baltimore

Don't do it. End of.

You have potentially much to lose and nothing to gain. A friend will understand; if they take umbrage, well, that tells you whether your innate kindness is misplaced.

harrys_dad

Don't do it, just don't do it. From the above posts you can now see you are entering in to an almost limitless possible financial loss. There is no sensible reason for you to do this at all.