Tenants without access to a personal guarantor are being left with fewer rental options, despite alternative solutions that could help them secure a home.
This is according to new research from lettings agency group LRG>
Its latest lettings report, based on responses from 717 landlords and 860 tenants across England and Wales, reveals a significant gap in awareness of professional guarantor services at a time when guarantors are becoming a more important part of the rental application process.
Asked what they would do if they needed a guarantor but did not have a family member or friend who could help, 51% of tenants said they would look for a cheaper property and 16% said they would stop their property search altogether.
Only 18% said they would use a professional guarantor service, while 15% selected another option.
LRG says the findings suggest some tenants may be ruling themselves out of suitable homes, or leaving the market altogether, because they do not know that alternatives to a family guarantor are available.
Awareness of those alternatives remains strikingly low.
Nearly three quarters of tenants, 74%, said they had never heard of professional guarantor services.
A further 12% had heard of them but did not know the detail, while another 12% were aware of the services but had never used one. Just 2% said they had used a professional guarantor.
Among the 37% of tenants who said they had needed a guarantor at some stage, 7% were unable to find one.
The issue has become more important in light of the Renters Rights Act which removes advance rent being a safeguard to landlords.
Over half of landlords responding to LRG, 54%, said they were now more likely to request a guarantor from applicants who did not comfortably meet standard affordability checks.
A further 28% said their approach had not changed, while 13% had always required a guarantor in those circumstances.
Only 5% said they were less likely to request one because they used other options, such as rent guarantee insurance, instead.
Rent guarantee insurance is also playing a growing role. Nearly 37% of landlords said they already had a policy in place, while a further 19% were actively considering it.
However, 17% said they were not aware that this type of protection existed, highlighting an opportunity for lettings professionals to explain the options available to both sides.
Allison Thompson, Chief Lettings Officer at Leaders – an agency that is part of LRG – comments: “Our research shows there is a real opportunity to make people more aware of professional guarantor services and rent guarantee insurance. By explaining those choices early, we can help landlords make informed decisions while giving more tenants a fair opportunity to find the right home.”
This article is taken from Landlord Today