A hugely increased number of tenants on salaries above £25,000 per year are being asked to provide a guarantor to secure a rental property, research from Goodlord has revealed.
Some 58% more earners between £25,000-£50,000 are being asked to provide a guarantor, with the proportion rising from 3.7% in 2020 to 5.48% in 2023.
With landlords facing new pressures, including rising interest rates pushing up mortgage costs, many are seeking out the security of a guarantor when agreeing new tenancies.
This acts as an extra layer of insurance against unforeseen circumstances, such as a tenant losing their job and being unable to pay rent.
Oli Sherlock, director of insurance at Goodlord, said: “The rental market is facing a series of overlapping challenges. We’ve spent years not building enough homes, meaning the supply of rental stock is low. This is being compounded by landlords – who are facing rising costs and ever more complex regulation – selling up and leaving the market.
“This supply and demand problem means rents are rising at a time when tenants have less disposable income thanks to the cost of living crisis. This means more tenants are being asked to show they have the support in place to meet their rental obligations, should they need it. As well as a rise in the number of tenants who find themselves needing to provide a guarantor, we’ve also seen a big increase in landlords taking out rental insurance.
“It’s a far from ideal situation for either tenants or landlords. The government should see this as an additional sign that more support for the rental market is urgently needed.”
The average salary for a full-time employee in Britain in 2022 was £33,000, rising from £31,461 in 2020.
In 2023 to date, the average cost of a rental property in England has been £1,099 per property per month, rising to £1,871 per month for properties in London.
This is up from an average price of £937 per property per month in 2020. In London, the average price of a property in 2020 was £1,612.
As tenants face these increased rental costs, many are seeing a greater proportion of their take home pay go towards rent. As a result, this means more renters are having to provide the additional security of a guarantor when signing a new tenancy.
