Recent research reveals a growing trend among landlords to require rent guarantors before agreeing tenancies. This shift reflects landlords’ increasing caution amid rising borrowing costs and forthcoming regulatory changes affecting the rental sector.

Rising demand for rent guarantors

According to a survey conducted by lettings management platform Alto, one third of letting agents have observed an increase in landlords insisting on rent guarantors over the past year. Specifically, 33% of agents reported a rise in guarantor requirements, with 11% noting a marked increase across their entire portfolios. This trend is emerging as landlords respond to a more challenging financial and regulatory environment.

Factors influencing landlord caution

Alto’s chief executive, Riccardo Iannucci-Dawson, explained that landlords’ nervousness is driving stricter tenant criteria. He highlighted that “higher borrowing costs, regulatory reform and longer eviction timelines all change the risk equation.” With less margin for error, landlords are seeking additional safeguards to mitigate potential financial risks.

Guarantors are increasingly viewed as a financial safety net, providing landlords with reassurance in cases where tenant affordability or profiles may be uncertain. However, Iannucci-Dawson also noted that this approach adds complexity for letting agents managing the tenancy process.

Impact of regulatory changes and market pressures

The recent Agency Trends Report from Alto draws attention to the removal of Section 21 eviction notices, which has lengthened the possession process through a more complex court procedure. This change has contributed to landlords’ preference for rent guarantors as a means of reducing risk.

Government data indicates that possession claims remain above pre-pandemic levels, while tenants continue to face arrears pressures amid rising living costs. Concurrently, rents have increased over the past two years, raising the financial thresholds applicants must meet to secure a tenancy.

What this means for landlords

Landlords should be aware that the growing reliance on rent guarantors reflects broader market and regulatory shifts that affect tenancy risk management. While guarantors can provide additional security, landlords and agents must balance this with the increased administrative complexity involved in vetting and managing guarantor agreements.

Understanding these dynamics is crucial for landlords aiming to maintain portfolio stability and minimise void periods in a changing lettings landscape.

Source: Based on reporting from Property118

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