Landlords benefiting from greater use of guarantors

The peak summer rental season in London has, as ever, been earmarked by a huge flock of recent graduates seeking properties to rent in the Capital.

This high demand has enabled landlords to ask for increased assurances, such as the backing of a guarantor - usually a parent.

Stephen Ludlow, Chairman of ludlowthompson, explains: "The summer rental rush in London is mostly made up of students and recent graduates who are moving to London in search of work.

"These tenants may not be able to demonstrate a sufficient income track record to pass their reference check when seeking a new property.  If that is the case we always suggest that they require a parental gurantor sign the tenancy to ensure that the rent will be paid.

"Once a guarantor is in place, these students and young professionals often make very tenants.  In the case of recent graduates, they often have more than enough income to pay the bills but also have the backing of their parents should the worst happen."

In one instance this summer, a ludlowthompson landlord let a property to two tenants who were earning over £30,000 each. Both provided parental guarantors as they had not built up enough of an income track record.

The advantages of using parental guarantors are:

• Landlords can be assured that if a tenant cannot meet rent payments, parents can be held accountable.
• Rent arrears are notably lower – ludlowthompson’s rent arrears were 4.5% in July 2012, significantly lower than the UK average of 9.2%.