Tenant Guarantor

FlyingTing

I would love to hear your opinions guys.


I have joint mortgage with my partner, and his brother who is currently on benefits asked him to be his guarantor for private rental property.


I have my worries, as he is not sincere, and he known for using everyone to have good lifestyle without working for almost a decade :-(


My worry is that we will be not be only liable for his rent but also for credit cards he opens and ranks up lots of debts.


I fully appreciate, he is trying to help him, however, my worry is that he will use us and it will go against both of our credit ratings and we will end up paying for everything.


Your thoughts are much appreciated.

thesaint

Pointless posting this question in my opinion.

DRP

guarantor is liable for all his rent if he doesn't pay it.

credit cards etc are unrelated.

princeofpounds

My worry is that we will be not be only liable for his rent but also for credit cards he opens and ranks up lots of debts.

That is not the case. A guarantee agreement is a contract limited to certain debts with a certain counterparty.

However, I think you have something to be worried about given his past record.

I cannot tell you whether to go for it or not. It is obviously a risk, but some people will feel they can take risks for family.

If you do decide to do it, I would advise two things:

1) Pay strict attention to what you are guaranteeing and the consequences if things go wrong. For example, will you guarantee just rent, or damage too? And if he decides to stop paying but also refuses to leave the property, what then? Your mantra should be limit your liabilities as much as you can, so that if things do go wrong you know how much damage there will be and can plan for it.

2) If you can, try to make the guarantee unenforceable. The most common mistakes are not setting the guarantee up as a deed, and getting you to sign the guarantee without giving you full details of what you are guaranteeing (esp. the tenancy agreement). Proving this may require a

19lottie82

My advice is,

1) Don't do it.

2) Don't do it.

3) Don't do it.


Seriously though, can you afford to pay his rent on top of your mortgage, if he doesn't?


BUT you will have nothing to do with his credit cards, only his tenancy.

BigAunty

If your partner agrees to be a guarantor for his workshy brother, a very risky proposition indeed, it won't directly impact your credit record and his personal debts are nothing to do with either of you.

Calculate how much of your partner's disposable income would be lost if your in-law gets into arrears and ask your partner 'Can you really afford to lose £x each week for the indefinate period of the tenancy?'. Get him to understand that there are two parts to risk - likelihood and impact.

Now your partner may think there is a low chance of your brother defaulting if he's got an optimistic view of his brother's attitude/behaviour but you need to get him to address the impact - the likelihood of a catastrophic struggle with his own finances and credit record if he has to support his brother's rent in full.

PS - does your partner appreciate that housing benefit is generally paid directly to private tenants? It is therefore up to the tenant to decide whether to pass it onto the landlord or spend it on themselves. Only tenants that are deemed to be vulnerable in some way, such as learning difficulties/addictions, etc, can instruct the council to pay their landlord directly. It is up to the council to determine on a case by case basis if they accept the tenant is vulnerable - the landlord, tenant or guarantor has limited or no influence.

Also, have you checked the level of the rent charged versus the Local Housing Allowance your BIL is entitled to? Those who are single and under the age of 35 without significant disabilities or dependents are only entitled to the shared accommodation rate. Those 35 and over, can get the 1 bedroom rate. Many properties have rent that exceeds the LHA rates and it is expected that benefit claimants pay the difference in rent/LHA out of their benefits. If he's on £71 a week Job Seekers Allowance, for example, even the tiniest top up is largely unaffordable. So do also check out if your BIL is overstretching himself from the start and quite likely to go into rent arrears. The local council publish LHA rates.

harrys_dad

Most of the reasons not to do it are listed on this recent thread

https://forums.moneysavingexpert.com/discussion/4938508

Seriously, just say NO.

FlyingTing

Thank you guys for all your replies.


Much appreciated.


Good to know, we are not responsible for his credit card debts.


It will be difficult to say no, however, we have to do it somehow.

princeofpounds

It will be difficult to say no, however, we have to do it somehow.

If that's how you feel.

Seriously, be aggressive on the guarantee agreement terms, don't sign anything unless you are totally happy with it. Manage expectations too; agreeing to be a guarantor is not the same thing as agreeing to sign any old guarantee agreement, in the same way that buying someone a present doesn't mean you are going to get them a ferrari.

Also make it clear that this will be the only guarantee he ever gets from any family member (to prevent him doing over everyone in turn).

Jenniefour

FlyingTing wrote: »

Thank you guys for all your replies.


Much appreciated.


Good to know, we are not responsible for his credit card debts.


It will be difficult to say no, however, we have to do it somehow.

Why not simply say you are not in a position to do it. You do not have to give a reason. If asked why repeat again - we are not in a position to do it.

jaylee3

DON'T. DO. IT. Take heed of what the poster above me has said. ^^^