A useful agreement that some landlords may want to use is a guarantor agreement. With this an individual or business (other than the tenant and normally in full time employment) guarantees to pay the rent should the tenant fail in this obligation. These agreements enable landlords to protect themselves from rental arrears and damage to the property. So, instead of taking out rent guarantee insurance with your landlord’s insurance. [link to landlord insurance article on u-rooms’ site?] you may want to use a guarantor agreement to protect yourself.
Guarantor agreements are commonly used by landlords that offer student accommodation,as it is unlikely that the student tenant has build up a good credit rating. In these cases the landlord usually accepts a guarantee from a parent that they will pay the rent should their child default on their rent.
In theory, this shouldn’t be too risky for the parent as they should know and trust their own child. However, parents will need to be careful if their child is in a flat or house share with joint tenancies, as they may end up guaranteeing the rent for the other tenants.
If you are a landlord offering student accommodation and want to use a guarantor agreement, you may want to offer individual tenancy agreements even with the shared property. However, this means that if a tenant renting a room from you leaves, it will be your responsibility to find a replacement (you should note that a tenant is bound to the tenancy terms unless you agree to terminate early).
It is not just for student accommodation that landlords use guarantor agreements. Young professional that are just starting work after getting their degree may get their parents or employer to act as a guarantor on their tenancy agreement, as they too may not have built up a good credit rating yet.
As a landlord you may want to use a guarantor agreement, especially if your rent student accommodation. It can be a good way to get protection from loss of income due to rental arrears.