More than half of renters in England could soon be required to provide a guarantor when applying for a property under changes introduced by the Renters’ Rights Act, according to new research from Zero Deposit.
The deposit scheme’s findings suggest a significant shift in the private rental sector, with the proportion of local authority areas where tenants are likely to fail affordability checks potentially rising from around one in five to nearly half of all districts. This points to a tightening of rental affordability conditions at a time when demand for housing remains strong in many parts of the country.
A key driver of this change is the new restriction under the Renters’ Rights Act, which prevents landlords and letting agents from accepting large sums of rent paid in advance. Previously, upfront payments often helped tenants strengthen their applications, particularly in competitive rental markets or where income levels were close to affordability thresholds. With this option now limited, landlords are expected to place greater emphasis on alternative forms of financial security.
At present, average rents across England sit at around £1,438 per month, which equates to approximately £17,256 per year. Based on standard affordability checks, tenants would typically need to earn at least £43,140 annually to comfortably meet these requirements. However, average earnings across England currently stand at £41,859, leaving a shortfall of around £1,281 for the average renter.
This gap between income levels and affordability thresholds means that many tenants are already operating close to, or below, the financial criteria used by landlords and letting agents. As a result, Zero Deposit estimates that in 19.8% of England’s 288 local authority districts, tenants are likely to require a guarantor in order to secure a rental property.
Regional differences also play a significant role in shaping this picture. London accounts for 22 local authority areas where average incomes fall short of affordability requirements, while the South East has a further 21 affected districts. These regions are particularly impacted due to higher rental costs combined with varying income levels, making it more difficult for tenants to meet standard affordability tests without additional financial backing.
Industry experts believe this trend could become more widespread as landlords adjust to the new regulatory environment. Sam Reynolds, Chief Executive of Zero Deposit, noted that while the Renters’ Rights Act is designed to improve security and stability for tenants, it also changes how landlords manage financial risk in the private rental sector.
With fewer opportunities to rely on large upfront payments and other traditional safeguards, landlords and agents are expected to rely more heavily on affordability assessments and income verification. This shift could result in guarantors becoming a far more common requirement for tenants who do not meet standard income thresholds.
Reynolds explained that this is likely to affect a broad range of renters, particularly younger tenants, overseas applicants, self-employed individuals, and those moving into higher-cost rental areas. These groups often face greater challenges in meeting strict affordability criteria, even if they are financially stable in other ways.
However, there are concerns that the growing reliance on guarantors may create additional barriers for some tenants. Not all renters have access to someone who is willing or able to act as a guarantor, and in many cases, this requirement can make the rental process more complicated and slower.
Even when a guarantor is available, referencing and verification procedures can delay applications, which is particularly problematic in a rental market where properties are often let quickly. This could place additional pressure on tenants to secure documentation and financial backing within tight timeframes.
The English Housing Survey highlights that around 21.5% of private renters currently pay more than one month’s rent in advance, showing how common upfront payments have been as a form of financial reassurance for landlords. With this practice now restricted under the new legislation, landlords may increasingly look for alternative forms of protection.
One possible response identified by Zero Deposit is a change in affordability criteria. At present, many landlords assess tenants based on whether their income is at least 2.5 times the annual rent. However, this threshold could rise to three times income as a more cautious approach to lending and risk assessment becomes standard practice.
While this would offer landlords greater protection against potential arrears, it would also make it more difficult for some tenants to qualify for properties, particularly in lower or middle-income brackets. This could further increase reliance on guarantors or other forms of rental security.
According to Zero Deposit’s analysis, if the income requirement were to rise to three times rent, the proportion of local authority districts where the average tenant fails affordability checks could increase dramatically. Instead of 19.8%, the figure could rise to as much as 47.6%, as average earnings would fall below the required threshold in 137 local areas.
This potential shift highlights the wider impact that regulatory changes could have on the rental market. While the Renters’ Rights Act is intended to improve tenant protections and create a fairer system, it may also lead to tighter affordability assessments and increased demand for guarantors across England.
Overall, the findings suggest that the private rental sector is entering a period of adjustment. As landlords adapt to new rules and seek alternative ways to manage financial risk, tenants may face more stringent application processes and greater emphasis on income verification.
In the longer term, the balance between tenant protection and landlord security will likely continue to shape how the market evolves. For now, however, the data indicates a clear trend towards stricter affordability checks and a growing reliance on guarantors, particularly in areas where income levels are already close to or below rental affordability thresholds.
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