Being a guarantor for rent - how risky is this?

Cannotrememberusername

My sister is doing her PhD at the moment, and is looking for a flat. She needs a guarantor, but I’m very concerned with regards to the risks on me.

Finically, we are not in a great position. Despite qualifying income wise to be a guarantor, we have many debts (mortgage, car loan, credit cards and paying towards our own daughter at uni) that we are working through, and as an example, we have £30 to last us until payday next week. 

We simply cannot afford to pay out should things go wrong.

I just feel awful - I want to help her. She has no one else to ask. She is sensible and dedicated to her studies, so I have no reason to believe things would go wrong, so am I worrying over nothing?

How risky is being a guarantor, and is there any means to protect oneself if you proceed?

Thanks

cymruchris

The risk is if she doesn't pay - you do.

So what's the plan if something goes wrong and she can't pay? What if she pulls out of the course after 6 months and runs off with the tutor, abandoning the flat?

As you say, she's sensible, so it's unlikely, but you say you can't afford to pay if she doesn't.

You have to balance that risk - many people will take the chance, and all goes well, a few will take the chance and it all ends in tears (And CCJ's). You have to analyse the risk and decide if it's the right thing to do.

Does she have any savings?

FlorayG

The risk is that the tenant doesn't pay the rent - then you have to
So it's all down to how much you trust your sister and how much SHE can afford so that you know she will be paying the rent. Hard as it sounds, I wouldn't be a guarantor for anything I really would struggle to cover.

JGB1955

Is she looking at a flat share?  If so, you could be on the hook for the total rent of all the occupiers, not just your sisters contribution. 

Bigphil1474

How much will it be? Depends where she is, what her expectations are etc. but you would hope that she goes for the lowest price at the least acceptable standard if she is asking you to be a guarantor. Is it a PHD subject that could lead to a well paid job, or is it a hobby subject ? Will she be working, is she a good worker. The questions are pretty endless but as her sister you'd know most of the answers. I have 5 brothers, 2 I'd definitely be happy to be guarantor for, 2 it would depend, and 1 would be a no thanks. If she is trustworthy, hardworking, and generally reliable, then it's a smaller risk that I'd take personally. Not so much a financial question rather than a family question.

On a side note, there's loads of discussion groups to deal with your own debt if you want to seek it out. £30 until next week is hard. 

lr1277

You are on the hook till she voluntarily gives up the tenancy or is evicted through a court process.

Edit: Actually forget the court process. The landlord has no need to go to court for non-payment of the rent because you are paying the rent as the guarantor.

So if it is fixed term you are on the hook till the fixed term and then until she gives up the tenancy.

If you are on the 2 month notice portion of a tenancy, again she has to give notice. You cannot give notice.

Hypothetically if she is on a fixed term till the end of the PhD, then she continues to stay in the property for her job, so the tenancy becomes a rolling tenancy, you are on the hook till she ends the tenancy.

Cannotrememberusername

cymruchris said:

The risk is if she doesn't pay - you do.

So what's the plan if something goes wrong and she can't pay? What if she pulls out of the course after 6 months and runs off with the tutor, abandoning the flat?

As you say, she's sensible, so it's unlikely, but you say you can't afford to pay if she doesn't.

You have to balance that risk - many people will take the chance, and all goes well, a few will take the chance and it all ends in tears (And CCJ's). You have to analyse the risk and decide if it's the right thing to do.

Does she have any savings?

No savings, no. 

That’s the problem - no back up if something unexpected occurs as you mentioned. We are in huge trouble if they come to us for money.

Cannotrememberusername

Bigphil1474 said:

How much will it be? Depends where she is, what her expectations are etc. but you would hope that she goes for the lowest price at the least acceptable standard if she is asking you to be a guarantor. Is it a PHD subject that could lead to a well paid job, or is it a hobby subject ? Will she be working, is she a good worker. The questions are pretty endless but as her sister you'd know most of the answers. I have 5 brothers, 2 I'd definitely be happy to be guarantor for, 2 it would depend, and 1 would be a no thanks. If she is trustworthy, hardworking, and generally reliable, then it's a smaller risk that I'd take personally. Not so much a financial question rather than a family question.

On a side note, there's loads of discussion groups to deal with your own debt if you want to seek it out. £30 until next week is hard. 

She really has worked hard for this opportunity, and it is in a field she will give something back to society and make a good living out of. That’s what makes it so hard.

The rent is in £650pcm. We don’t have anything left each month for this should the worst happen.

Cannotrememberusername

Thanks everyone. Really appreciate the advice.

Also, what happens in situations where the house is damaged? Would I be liable for that too? Are we looking beyond the rent at a potential debt of thousands if there’s a fire or she breaks something expensive by accident?

Bookworm105

it is very risky if she is sharing with others on a Joint Tenancy agreement you will have to fight hard to get the LL to agree a guarantee in respect of your sister only.
The norm for Joint Tenancies is to guarantee "the rent", so if one of the other tenants defaults you could end up paying their rent when they mean nothing to you.

Cannotrememberusername

I think the tenancy isn’t shared, but not sure on that 100%