joint and several liability

aeropress

My son is going into a house share with her Uni 'friends'. We have been asked to complete a guarantor form which shows the tenancy agreement being a joint and several agreement which I understand means that if a tenant drops out or cannot pay then other tenants/guarantors will be liable to pay for them. We were not happy about being a guarantor for the whole rental and were informed about Only My Share, an insurance cover for the joint and several liability clause to limit our and son's liability to only his share of rental. 

Has anyone had any experience of using Only My Share. Is this a reputable company and has any one had reason to claim from them, if so was it a straight forward process and did they meet their obliations to pay for rent arrears of other student tenants?

DullGreyGuy

First of all, it's not an insurance cover. It's a "guarantee" and they themselves have insurance but your benefit of that is they are less likely to go bust. As a consequence you have no rights to go to the Financial Ombudsman if you dont like the outcome of their claim etc. 

To me the concerning part of their agreement is:

At our discretion agree to waive any rights under common law to recover any amounts we pay from the Guaranteed or the Tenant that the Guaranteed has provided a rent guarantee for.

So basically, they negotiate with the landlord, pay any shortfall above the deposit, and then will try to get the money back from either the defaulting tenant or any of the other tenants. It's only at their discretion that it doesn't include you. Personally, Id want it stronger than just a discretion. 

Secondly, what happens if multiple tenants have this guarantee? Say your son and one of the friends do, do they pay 50% under each of the agreements and then they do attempt to get 50% back from your son because under their friends policy your son is just a co-tenant and not party to the discretionary waive

Historically their website had wrong information on it, they have at least cleaned that up. 

aeropress

Thank you.. what about gurantorInsure ? is that also an insurance against the joint and several liability?

www.guarantorinsure.co.uk/#contact

DullGreyGuy

aeropress said:

Thank you.. what about gurantorInsure ? is that also an insurance against the joint and several liability?

www.guarantorinsure.co.uk/#contact

Ultimately you will need to read the policy and ensure you are comfortable with it. The actual insurer is based in Gibraltar, which personally Im not a fan of, but does mean you have access to the Ombudsman if a complaint happens. 

A quick scan certainly shows an onerous requirement up front, you have to evidence that none of the tenants at this or their previous address have been subject to action for non-payment of rent or damages previously. Secondly you have to use their alternative dispute resolution service before the insurance itself kicks in... from the scan read its not clear what outcomes from the ADR can then be taken to insurance.

aeropress

these are these are the only 2 guarantees / insurance I found to help protect against the joint and several liability in joint tenancy for students. Does anyone know of any other options? I imagine I’m not the only student parent guarantor with these concerns….?  The situation seems to leave student and their guarantors pretty exposed to these risk?

ReadingTim

The solution is to push for a different form of tenancy agreement: a tenancy in common or sole tenancy agreement. There is no guarantee that the landlord will accept that however,  

A cheaper alternative is to chose one's friends and flatmates carefully, which is quite a good lesson in life generally.  

aeropress

 thanks. It appears the joint tenancy is the norm for students attending Newcastle University.  Parents acting as guarantors for joint student tenancies seem to accept the joint and several liability as a risk which is not likely to happen.  I am surprised. With the current economic climate and job instability, the risk of a guarantor falling into financial hardship, students pulling out, or not being able to keep up with the rental demands is not farfetched.  Little seems to be available to mitigate this risk for guarantor parents. 

I’ve decided to have my son pull out of the 7 student house share. This was a hard decision, and a disappointing one for my son, but it’s a financial risk I cannot take. 

The other 6 parent guarantors all signed - accepting the risk as the norm.  The lease was for 12 months - £49 000 annual rent. So each student would sign up to pay a total of  £7000 (split into monthly rent instalments). Guarantors are checked for (3x £7000) income to cover their student tenant, but are legally liable for the full £49000, should any one of the other students fall into rent arrears.  

Student housing advice at the university had little or no feedback on the two products I found - for anyone else looking to use them mitigate risk, the student help at the university was:

only my share:  
- we (university student advisor) know they are affiliated with housing hands, and other students have enquired about them, but we do not know if they used them or if they have had to make a claim form them.  But we know of housing hands, which offer a guarantor service for mainly international students.

guarantor insure:
- we (university student advisor) are not familiar with this company or insurance.

I put my experience on here hopefully to help other parents if they find themselves in a similar situation.  I’ve opted to ask my son to look at student accommodations which offer individual tenancies for the room.   These are more likely to be slightly more expensive, offer en-suite rooms and inclusive of some utilities. For me the financial risk and liability of this option is limited to my son.  Though this is not my son’s preferred choice, unfortunately it seems to be the only option offering limited liability to each student tenant. 

Making this decision was hard, there’s is a lot of pressure for parents feeling pushed into signing a joint tenancy as guarantor, with people telling them that the joint and several liability is just the norm, and in most cases there isn’t a problem.  But the truth is you are asked to take on the liabilities of the other students - families you do not know, and maybe not even met before.  So due thought should be given before any thing is signed. 

Despite people saying it’s not likely to happen… fact is, things can happen and if something does go wrong….then you are on your own with the joint and several liability…

bouicca21

When DD was at uni and was given a similar agreement, refusal to sign promptly led to a new one without the joint and several clause.  Try it.

caprikid1

There are likely to be no policies because it's not a risk anyone wants to insure. So many student tenancies fail with one student dropping out etc.

If no one wants to insure a risk that tells you something !.

silvercar

As long as all parents are signing for joint liability, the chances are that the students will behave responsibly. The problems occur when some of the parents are overseas or where a few parents have signed and the landlord or agent allow the joint tenancy to go ahead without ensuring that the other parents have signed, leaving those that signed with a more riskier responsibility. 

 

The real problem is that you want to do best by your child and that often means taking a risk on the friends they have chosen. Otherwise you leave them finding a less optimal group of friends and so a looser support network or the dregs of student accommodation where a desperate landlord will take anyone without guarantees.

youth_leader

My husband died in 2016 when my 20 year old daughter was in her second year of Leeds Uni, and I took over as sole Guarantor. It was different as I did pay her rent of £433 per month, she was in a none too salubrious area and I didn't feel comfortable about her walking home late at night from a p/t job.

One person did drop out of the 12 person house, but they found a replacement immediately. 

She is now 28 and I am still a Guarantor for her rental in NI which she shares with her boyfriend.  Off the hook soon - they've just bought their first place.