Applications for rent guarantors have increased by more than 50% as landlords adapt to the new regulatory environment created by the Renters’ Rights Act, according to Housing Hand.
The rental services provider says demand has surged following implementation of the legislation on 1 May, with landlords increasingly asking tenants to provide guarantors as part of their approach to managing rental risk.
Housing Hand attributes some of the increase to restrictions on landlords requesting rent in advance, which have changed the options available when assessing prospective tenants.
Despite the sharp increase in applications, the company says it has not experienced a corresponding rise in claims for unpaid rent.
GUARANTOR DEMAND
Graham Hayward (main picture), Managing Director of Housing Hand, says: “The growth in rent guarantor applications we have received has been phenomenal, as the market manages its changed risks in the new Renters’ Rights Act landscape.
“Most landlords can’t request or take more than one month’s rent upfront anymore, so they’re asking renters to provide guarantors instead.”
Housing Hand says landlords are also using professional guarantor providers to assist with Know Your Customer requirements, including sanctions, politically exposed person and source-of-income checks.
CLAIMS REMAIN STEADY
Housing Hand has paid around £7m to accommodation providers over the past five years, with payouts currently averaging approximately £1.5m annually.
The company says that average has remained broadly unchanged despite the increase in demand for guarantors and changes to the regulatory environment.
Hayward says: “The overall volume of payouts remains pretty static, demonstrating the efficacy of the work we do with accommodation providers to minimise their risk.
“The rental landscape has changed significantly, and driven up demand for rent guarantors enormously, but landlords who have worked proactively with guarantor services have largely taken the changes in their stride.
“For those landlords who do need to make a claim, we’re able to settle digitally within 21-27 days through our 24/7 online portal.”
