Most tenants unaware of professional guarantor services in rental market
New research reveals that a large majority of tenants do not know about professional guarantor services, limiting their rental options as landlords increasingly request guarantors following recent tenancy law changes.
Research conducted by lettings agency group LRG, surveying over 700 landlords and 850 tenants across England and Wales, highlights a significant lack of awareness among tenants about professional guarantor services. This gap comes at a time when guarantors are becoming more important in rental applications, especially after the introduction of the Renters’ Rights Act, which removes advance rent as a safeguard for landlords.
The survey found that 74% of tenants had never heard of professional guarantor services, while only 2% had ever used one. When asked what they would do if they needed a guarantor but had no family or friend to act as one, 51% said they would search for a cheaper property, and 16% said they would stop looking altogether. Just 18% said they would consider using a professional guarantor service.
Survey findings on guarantor usage and landlord practices
The LRG report reveals that 37% of tenants had needed a guarantor at some point, but 7% of those were unable to find one. This lack of access can effectively exclude tenants from the rental market or force them to compromise on property choice.
Landlords are responding to the Renters’ Rights Act by increasingly requesting guarantors for tenants who do not clearly meet affordability checks. According to the survey, 54% of landlords now ask for guarantors more often, while 28% have not changed their approach, and 13% have always required guarantors in such cases. Only 5% of landlords reported relying more on alternatives such as rent guarantee insurance instead of guarantors.
Rent guarantee insurance is gaining traction, with 37% of landlords already holding a policy and 19% considering it. However, 17% of landlords were unaware such insurance existed, indicating a need for better education on risk mitigation options in lettings.
Context of guarantor services amid rental regulation changes
The Renters’ Rights Act has altered the balance of risk between landlords and tenants by removing advance rent payments as a form of security. This has led landlords to seek additional safeguards, such as guarantors or insurance products, to protect rental income. As a result, guarantors have become more prominent in tenancy agreements.
Professional guarantor services offer an alternative to relying on family or friends, providing tenants without personal guarantors a way to secure a tenancy. Yet, the low awareness among tenants means many do not explore this option, potentially restricting access to suitable rental properties.
For landlords, understanding the availability and function of professional guarantor services and rent guarantee insurance is increasingly important. These tools can help manage risk while expanding the pool of eligible tenants, especially as affordability checks tighten in response to economic pressures.
Practical implications for landlords and letting agents
Landlords and letting agents should recognise that many tenants are unaware of professional guarantor services and may prematurely limit their property search or withdraw from the market. Proactively informing applicants about these services could widen access and reduce void periods.
Additionally, landlords should review their risk management strategies in light of the Renters’ Rights Act. Combining guarantor requirements with rent guarantee insurance can offer a more comprehensive approach to safeguarding income. Letting agents can play a key role in educating both landlords and tenants about these options.
Agents and landlords should also consider how to communicate guarantor requirements clearly during the application process to avoid surprises and reduce application withdrawals. Transparent guidance on alternatives to family guarantors can improve tenant confidence and decision-making.
Remaining uncertainties and considerations
While the survey highlights current trends, the long-term impact of the Renters’ Rights Act on guarantor use and insurance uptake remains to be seen. Changes in tenant behaviour, landlord risk tolerance, and the availability of affordable guarantor services could shift the market dynamics further.
There is also uncertainty about how professional guarantor services will evolve and whether regulatory oversight will increase, particularly regarding fees and terms offered to tenants. Landlords and agents should monitor developments and seek updated guidance to ensure compliance and fairness.
What landlords should consider now
Landlords should assess their current tenant vetting and risk management policies, considering whether guarantor requirements align with their portfolio risk profile. They should also explore rent guarantee insurance as a complementary safeguard.
It is advisable to engage letting agents in discussions about tenant awareness of guarantor services and to encourage clear communication about these options during tenancy applications. Reviewing tenancy agreements and application procedures to incorporate professional guarantor options where appropriate can help reduce barriers for tenants.
Staying informed about market trends and regulatory changes will be essential to adapt practices effectively. Landlords should also verify the legitimacy and terms of any professional guarantor service before recommending it to tenants.
Supporting landlords with compliance and tenant management
The Landlord Association (TLA) offers membership resources that can assist landlords and letting agents in managing the complexities around guarantors and rent protection. Through TLA’s compliance materials and guidance, members can stay updated on regulatory changes like the Renters’ Rights Act and understand how to implement effective risk management strategies.
TLA’s new property management and compliance platform, ORBIT, currently available in BETA testing, is designed to help landlords organise their portfolios, manage rental documents, and keep track of key actions such as tenant communications and risk assessments. While still in development, ORBIT aims to support landlords in maintaining evidence of compliance and managing guarantor arrangements alongside other tenancy requirements.
Exploring TLA membership and accessing these evolving tools can provide practical support for landlords navigating the increased emphasis on guarantors and insurance in the rental sector.
Looking ahead, landlords who proactively adapt to these changes and educate tenants about available options may find it easier to secure reliable tenants and reduce void periods in a shifting rental market.
Sources: Landlord Today
TLA - The Landlord Association