Demand for rent guarantors has increased by 50% since the Renters’ Rights Act came into effect in May, according to new figures from Housing Hand.
The guarantor provider says applications have climbed significantly during the first 100 days under the new rules, as landlords and letting agents adapt to restrictions on rent being collected in advance.
The legislation limits how much rent landlords and agents can request before a tenancy begins. Once an agreement has been signed, they can generally ask for no more than the first month’s rent before the tenant moves in.
Tenants can still choose to pay additional rent in advance once their tenancy has started, but landlords cannot require large upfront payments as a condition of the tenancy.
Landlords Turn to Guarantors
Housing Hand managing director Graham Hayward said the company has experienced a substantial rise in applications from renters looking for guarantor support.
He said the changes have altered the way landlords manage rental risks, with many now turning to guarantors because they can no longer rely on collecting several months of rent upfront.
Hayward added that most landlords are affected by the new restrictions, although purpose-built student accommodation (PBSA) is largely exempt from the Renters’ Rights Act.
For landlords, a guarantor can provide an additional layer of security when a tenant is unable to meet their rent obligations.
Missed Rent Claims Remain Stable
Despite the sharp increase in demand for guarantors, Housing Hand says it has not seen a corresponding rise in claims relating to unpaid rent.
The company has paid approximately £7 million to accommodation providers over the past five years, working out at roughly £1.5 million each year. According to the provider, that level of payouts has remained broadly unchanged.
Hayward said the increase in guarantor demand does not appear to have resulted in a significant rise in missed-rent claims.
He also said landlords that had already worked with guarantor providers were generally able to adapt to the changes without major disruption.
Overseas Renters Face Guarantor Problems
The increase in demand comes as some international renters face difficulties meeting guarantor requirements.
Tenants from overseas can sometimes afford the rent but struggle to provide someone based in the UK who is willing and eligible to act as their guarantor.
This could become a particular issue in London, where rental costs have continued to increase.
Data from Zero Deposit shows that average London rents rose by 9.9% over the two years from May 2024, increasing from £2,088 to £2,294.
Foxtons data also highlights the importance of overseas tenants to the London rental market. Around 63% of its tenants are from overseas, meaning a significant proportion of renters may face difficulties providing a UK-based guarantor.
What Does This Mean for Landlords?
The figures suggest that the Renters’ Rights Act is changing how landlords approach tenant affordability and rental security.
With large upfront rent payments no longer available as a way of reducing risk, guarantors are becoming more important for some landlords and letting agents.
At the same time, the stable level of missed-rent claims reported by Housing Hand suggests that the increase in guarantor applications has not so far been accompanied by a similar increase in payouts.
For international renters, however, the growing reliance on guarantors could create another barrier to securing accommodation, particularly in high-cost rental markets such as London.
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