The Importance Of Having A Tenant Guarantor (If You Want To Get Paid!)

3 years into a tenancy you would figure that you pretty much know a tenant.

No.

This isn’t so.

And that is because in that time period not enough stuff has happened for the tenant to react to.

What do I mean by that?

Well, as a landlord, you truly get a measure of a tenant when the shit hits the fan, and they don’t know what to do about it.

Now, I have always operated an open door policy and I encourage my tenants to talk to me when stuff goes wrong, or if they think stuff might go wrong.  It’s a policy which has stood me well and seen me, on many occasions be the first or second person to know when a tenant has lost their job, split up with their partner or become pregnant.

It’s a privileged position to be in and I cherish it.

However some tenants, no matter how well you have got on in the past, struggle when stuff goes wrong.  Humiliation, embarrassment and all such emotional hang-ups get in the way of dealing with the practical stuff at hand.

Such as paying the rent.

Paying the rent on time and in full every month is a big deal.  It’s part of the contract tenants and landlords have with each other (along with looking after the property and all the rest of the shebang.)

Not paying the rent is a real deal breaker.

It really is.

Chasing debts is not a chore I enjoy, however it is part and parcel of the role of being a landlord.  I know many people get anxious about asking for money owed, however it’s always easier when you think of the role of a landlord as a job.  So, taking that line of thinking – would you go to work for your boss and not say anything when you don’t get paid at the end of the month?

No, I didn’t think so.

Seeing an empty pay cheque at the end of the month you would soon be on to your boss saying: “Where the hell are my wages??”

Which is how you need to approach the question of tenants not paying rent.  Because a tenant not paying rent, is like your boss not paying your wages.

Now sometimes these situations become unstuck.  A tenant loses their job and along with that lose some of their confidence in dealing with the situation and talking with you.

This is the worst part.  A tenant who sticks their head in the sand will quickly find out it’s just a bucket of quick sand which they will sink deeper and deeper into.

And debt is very much like quick sand – it can soon spiral out of control.  That is why I am very quick to catch tenants before they fall too far and cannot find their way back.  Sinking is not what I like to see anybody do.

However, shit happens.  And when tenants who owe you rent no longer answer your calls, texts, emails or letters, it’s about to get a whole lot worse.  And a whole lot shittier.

Unless you’re in the fortunate position to have a tenant guarantor.  And that is an exceptional fall back.  Many agents are quick to push rental insurance – but a good guarantor for an incoming tenant is not only a back-up if the funds are not forthcoming, but many guarantors will occupy a position of authority in a tenant’s life.

You could call it a moral guardian.

Which is important.

Because as any landlord knows, it’s not just about paying the rent that marks a good tenant out as a good tenant.  Good people can also go off the rails.  The point is to help them back on.

And that is where a guarantor can step in and assist.  Guarantors cannot be underestimated in terms of their importance if you want to get your rent paid and ensure your property is looked after.  That is why when you take a guarantor on, you should reference them the same as tenants – if not more so.

A suitable guarantor will most likely be a homeowner and employed.  They also need to be someone who is willing to be legally bound to make good any rent owed or pay out for any damages that may arise during the tenancy.  It’s a big responsibility – and not one any guarantor should enter into lightly.  Not least because it’s a big financial commitment, but more so, once you have signed you cannot change your mind about being a guarantor and will be responsible for the tenancy almost as much as the tenant until the end of that tenancy.

For the landlord, the tenant’s guarantor is both your safety net and guardian angel.

And so I was delighted that my errant tenant’s guarantor is his grandfather.  Admittedly, I felt a bit of a snitch calling on him, but I don’t want the situation to escalate out of control.

But neither does he, and neither does the tenant.

Someone just needs to take control.

Which is the landlord’s job.

So in this case, the grandfather guarantor and tenant have talked and taken action.  The situation is back on track and out of the murky spiral it was about to enter.

Will it all work out in the end?  Who knows, but I hope so.

The morals of the story:

As a landlord, and especially as a landlord who is owed money, you have to step up to the mark.  And you have to do it pronto.  No matter how awkward and uncomfortable it feels.

You need to cover your back, get guarantors where possible and don’t be afraid to talk to them.  You may feel bad now, but believe me, you’ll feel an awful lot worse if you have to evict the tenant due to the rent arrears.  Not only will you be out of pocket, your tenant will be out of a home.