As a tenant you may have already noticed some odd requests from letting agents when applying to rent a property and are not sure why.
Likely it is to do with the Rental Reform Act, which is having some perhaps unintended but for us in the industry – foreseen consequences.
The trouble with students
Students, by their very nature of not yet working, don’t have a steady income. They may have loans, they may have parents, but as with a mortgage company wanting to see your payslips before they’ll lend you money to buy a house – landlords want to see that you are regularly earning money in order to pay them their rent.
The way around this has always been two-fold – to either pay several months rent upfront (typically 6 or 12) and/or to have a UK-based guarantor – that is, a close family member or friend who will pick up the debt should you default.
The trouble for students
The new Rental Reform Act is very likely to bring in the banning of landlords taking any more than 1 month rent upfront.
This means that paying upfront will no longer be an option for students – and so they will be expected to have this UK-based guarantor, as landlords won’t just forgo this level of protection and accept 1 month only.
This is OK for those with parents etc here, but those from overseas will likely struggle. Hopefully, more guarantee schemes will come about, but how secure they are will vary.
Not just students
It isn’t just students who need guarantors, but also those with new jobs / unprovable track records, or on low incomes (ie barely reaching the affordability threshold). Landlords will be far more likely to request guarantors in all sorts of situations, if they cannot take the security of more rent upfront.
The flexibility of being able to adapt your offering as a tenant, to a landlord has always been something that has been good for the London rental market and those tenants. What happens next remains to be seen as we keep a close eye on the final stages of the Act.
