Guarantor request by LL for student accomodation

aquitaine

I have been asked to be a guarantor for the rent and any damages by an estate agency from whom my son has obtained a flat along with some friends. There are a number of things about this which I find rather concerning.

The estate agent signed him up and took a deposit etc then demanded (not asked) that any guarantor undertake unlimited liability not just for him but for all the other students in the flat share as well. Ie provide the landlord with insurance cover with unlimited liability for a number of unknown people. They didn't warn my son that this was part of the deal and that the family home could be at risk. It seems to me that this is miss-selling on a grand scale whereby a sophisticated financial operative hoodwinks an financially unsophisticated 19 year old into a contract with limitless risk for his family without any sort of warning whatsoever. Isn't it compulsory to issue such warnings with any contract which potentially puts your house at risk?

Is it not also illegal to start offering ad hoc insurance to strangers? The provision of insurance is a highly regulated market overseen by the Bank of England via the Prudential Regulation Authority. Unsurprisingly it is unlawful for an individual to start providing insurance cover to others without first passing some extremely stringent checks. We are into Lloyds Name territory here as far as risk is concerned.

Given the record of the financial services industry nothing much they do would surprise me. It was normal practice to miss-sell everything from pensions to PPI, this looks like more of the same.

Given all of the above it looks to me like the landlord and his estate agent have broken just about every rule in the book from failing to advise a naive youngster that "your house may be at risk" etc to demanding illegal insurance cover for a load of people I have never even met.

I did offer to guarantee my son's rent for £3k and any damages for £3k which I thought was very generous but it was rejected out of hand and the demand for (illegal) unlimited liability for all the tenants remains. He has also been threatened with having his deposit confiscated (stolen) if he doesn't come up with a guarantor pronto. He has also been refused the keys until he comes up with a guarantor which seems a bit rich as he has paid the rent etc in advance and the tenancy should have commenced a couple of days ago. He is being held to ransom by an unscrupulous estate agent and landlord despite having been tricked out of a deposit with no warning of the risk attached. I imagine he can demand a pro rata refund for every day he pays for where occupancy is denied.

Has anyone come across this sort of corporate racketeering and dealt with it successfully?

mozza78

You might want to have a read of this thread..

https://forums.moneysavingexpert.com/discussion/5507688

aquitaine

Thanks for that. Much disgust being voiced there but no real conclusions. It is the miss-selling and demands for illegal insurance cover which I was hoping someone might have addressed and had some success with. What these estate agents are doing seems like pretty brazen law breaking to me. Typical of the arrogance of the financial services sector who never seem to learn.

anselld

Please don't confuse things further by calling this Insurance. It is a Guarantor agreement for a Tenancy which your Son wishes to sign.

You are simply being asked to Guarantee your Son's own obligations under the Tenancy Contract.

There is nothing fundamentally wrong with that form of Contract, but yes all parties should understand what they are signing up to and if they don't like it they should chose an alternative.

BrassicWoman

He'll need to find somewhere else to live then - suggest a non student rented room with live in landlord is least likely to want a guarantee.

aquitaine

I am not being asked to do anything. It is being demanded that I underwrite possible defaults on rent and potential damages caused by three people I don't even know as well as my son. To underwrite such risks on unknown third parties is clearly to insure them and to try and call it anything else is disingenuous.

Nebulous2

Very common for students, but not always required. Your overdramatic presentation of it doesn't help. Presumably the other tenants will also need guarantors? So if your son and then you evade your responsibility their families would also be on the line?

Having said that I do think letting agents need to be controlled. The desperate person in need of a house and the over enthusiastic naive young student are a ripe market for exploitation.

anselld

aquitaine wrote: »

I am not being asked to do anything. It is being demanded that I underwrite possible defaults on rent and potential damages caused by three people I don't even know as well as my son. To underwrite such risks on unknown third parties is clearly to insure them and to try and call it anything else is disingenuous.

Conduct an argument on a technicality if you want, but it will not bring about a solution to your Son's accomodation problem.

aquitaine

It was very common for the financial services industry to miss-sell PPI, mortgage endowment policies, pensions etc. Just because it is now very common to find this with student accommodation contracts does not mean it is above board, quite the opposite in fact, given the track record of this industry anything they offer should be treated with extreme caution. A trusting 19 year old is an easy target for these charlatans.

aquitaine

Technicalities are where these things are won or lost.

BrassicWoman

aquitaine wrote: »

Technicalities are where these things are won or lost.

And you will lose with that arguement. It's a guarantee; sign it or don't, then get on with your life.