More guarantors demanded as economy slump goes on

An analysis of tenants renting between 2020 and 2023 shows a big rise in those on high salaries asked to provide guarantors. 

The study, by PropTech firm Goodlord, looked at 783,000 tenants; of these, 138,949 were asked to provide a guarantor.

The data shows a rise in guarantor requests during 2020, likely driven by the market uncertainties created by Covid. However, instead of dissipating following pandemic, guarantor request rates stayed high.

Since then, rates of guarantor requests have been steady. Some 17.7% of all tenants were asked to provide a guarantor in 2020 compared to 18.4 per cent in 2023.

However, when broken down by salary and age, a new picture begins to emerge. 

For tenants with no income (typically students - the group most associated with the need for guarantors), the number of requests has been broadly stable since 2020.

But for all other income groups there has been a significant increase. 

Tenants earning £50,000 to £74,999 are 82.3 per cent more likely to have been asked to provide a guarantor in 2023 compared to 2020. In 2020, 1.47 per cent of this group were asked to provide a guarantor, rising to 2.68 per cent by 2023.

For those earning £75,000 to £99,999, the shift is more stark. Renters in this salary bracket are 187 per cent more likely to have been asked to provide a guarantor in 2023 compared to 2020. Back in 2020, just 0.6 per cent of this age were asked to provide a guarantor, but this had risen to 1.72 per cent by 2023. 

The data also shows that younger tenants are most likely to have been affected by this increase in guarantor requests. 

Renters under 30 - over 55 per cent of the tenant population - are nearly eight per cent more likely to be asked to provide a guarantor today compared to 2020, even if they are a high earner. Goodlord says this may indicate that landlords and letting agents have lost confidence in the viability of young tenants to make their rental payments, regardless of their current financial position. 

The picture is different for the over-60s. 

Whilst making up under three per cent of the renting population, this age group saw a 10 per cent decrease in requests for guarantors.

Goodlord managing director Oli Sherlock says: “Asking for a guarantor used to be very concentrated amongst student tenants and those who, on paper, looked like they may be renting outside of their means. The pandemic widened this net and asking a broader demographic of tenants for additional assurances became embedded for many landlords and agents. 

“As this analysis shows, the practice has trickled out beyond the ‘traditional’ groups, meaning higher earners are increasingly likely to find themselves providing guarantor details. 

“This practice will undoubtedly be frustrating for tenants who easily meet affordability checks. 

“However, landlords have faced four years of intense uncertainty and complex regulatory changes; their desire to seek out additional assurances isn’t illogical. 

“A sensibly utilised system of guarantors is a vital feature of any healthy rental market, but agents should caution against excess or unnecessary use of the practice.”