Increasing numbers of relatively well-paid tenants are being asked to provide a guarantor.
That’s the view of PropTech firm Goodlord which says that the number of tenants earning £25,000 to £50,000 being asked to provide a guarantor has risen by 58 per cent since 2020, and the number of tenants earning £50,000 to £74,999 being asked to provide a guarantor has risen even more – up 92 per cent since 2020.
The average salary for a full-time employee in Britain in 2022 was £33,000, only a modest rise from the 2020 average of £31,461.
In 2020, just 3.7 per cent of tenants earning salaries of between £25,000 and £49,999 were asked to provide a guarantor by their letting agents or landlord.
However, in 2023 to date, this has risen to an average of 5.84 per cent of all tenants – an increase of 58% per cent compared to 2020 figures.
Goodlord says this means requests for guarantors are now far higher than even at the peak of the pandemic, when hundreds of thousands of renters were placed on furlough or faced an increased chance of redundancy.
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.
Goodlord spokesperson Oli Sherlock says: “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.”