Guarantor or deposit? What the new Renters’ Rights Bill means for you
The role of a guarantor has always held a vital role in helping residents secure a home, particularly where a resident faces challenges like poor or limited credit history, or non-traditional income sources.
The Renters’ Rights Bill is about to change the landscape, meaning that a guarantor may no longer be as helpful as they have been in the past. As currently proposed, the Bill removes a number of the flexible tools landlords and agents have previously used to manage risk around tenancies.
After the Bill is implemented, there will be:
- A ban on rent in advance.
- No fixed-term tenancies.
- No more no-fault, Section 21, evictions.
These changes may appear to make life fairer for residents, but they will create real challenges when it comes to offering homes to renters in a wide range of circumstances, for example the self-employed, people who are new to the UK, employees on variable incomes and students. These tenants are more likely than ever to need a guarantor to secure tenancies, because landlords will want additional reassurance.
At Maxine Lester, we know that renting your property should never be a leap into the unknown. Many owners rely on a guarantor as an extra layer of financial security, but with the new Renters’ Rights Bill on the horizon, this is set to work a little differently.
A quick refresher
A guarantor agrees to pay the rent or cover costs if the resident cannot.
Traditionally, many owners have taken a guarantor and a security deposit for additional peace of mind.
What’s changing?
The government wants to make renting fairer and more transparent. One significant proposal is that owners may no longer be able to request both a guarantor and a deposit for the same tenancy. This is to ensure residents aren’t double-charged or burdened with multiple layers of financial commitment.
Here’s what this means for you
One or the other
If you accept a guarantor, you may not be allowed to take a traditional deposit as well. This means you’ll need to decide which option gives you the best protection for your particular resident and situation.
Greater reliance on the guarantor
Without a deposit as a financial buffer, your reliance on the guarantor to cover unpaid rent or damage increases. This makes it even more important to choose a guarantor carefully and ensure all agreements are rock solid.
Deposit alternatives:
We expect more owners may look at deposit replacement schemes or rent guarantee insurance to fill the gap left by not being able to hold a traditional deposit alongside a guarantor.
What should owners do now?
Reassess your tenancy options
Think about the type of residents you let to – would a guarantor alone give you sufficient cover, or would you feel more secure with a deposit instead?
Check your paperwork
Make sure your guarantor agreements are crystal clear and legally compliant. We can help review and update these for you.
Consider additional protections
Rent guarantee insurance is likely to become even more valuable for owners under these changes, providing extra reassurance if you opt for a guarantor without a deposit.
Talk to us
We’re here to guide you through these changes and help you make the right choices for your property and peace of mind.
Final thoughts
While the Renters’ Rights Bill aims to protect residents from excessive upfront costs, it also means owners need to be sharper than ever about how they manage financial risk. Whether you opt for a guarantor, a deposit, or additional insurance, we’re by your side to make sure you’re covered —expertly, honourably and personally.
If you’d like to know more about how the rents rights bill will affect you join us at our free webinar on Thursday 24th July and ask the questions that are personal to you.
