“Once we have met the landlord, we get a chance to view the property, and it goes well and they want you to have the room! One big problem, though – they ask for a guarantor. Many young people in care, like myself, have no family or relatives who can afford it.”
- Jason, a young person in supported accommodation
The barriers faced by young people in finding affordable rental properties are well documented. Not only are rents at a historic high, young people are disadvantaged by having typically lower incomes and less credit history than those they are competing with for the scant number of available properties.
However, an additional barrier has recently emerged, further pushing even the most basic of rental properties beyond the reach of young people, especially those looking to move into independent living for the first time.
This new barrier is the increasing requirement for rent guarantors.
This article takes a look at this concerning trend, drawing on recent research to explore how the need to find a guarantor is impacting potential renters and young people in particular. We also present the experience of youth homelessness charity, Step by Step, for a frontline view of the impact on those attempting to move on from already challenging circumstances.
Pulling together this evidence and insight, we look at what can be done to remedy the situation. This includes our recommendations for policy change, to support some of the most vulnerable people in our society who simply want a place to call home.
Citizens Advice1 defines a guarantor as “someone who agrees to pay your rent if you don’t pay, for example a parent or close relative”. If a landlord does not receive what they are owed by a tenant, they can ask the guarantor to cover the cost. A dispute may ultimately lead to a landlord taking the guarantor to court.
The guarantor is usually also liable for non-rent costs, such as damage to the property.
According to Halifax2, a guarantor must be a UK resident over the age of 18, with a good credit history and able to meet an income or savings threshold. They must also have been known to the potential tenant for at least two years.
There is evidence that private landlords are increasingly requiring tenants to have guarantors. The Independent3 found that the number of landlords asking for a guarantor has risen by 36% in the last four years.
It would appear that the group of people most likely to be asked to produce a rent guarantor are also the group less likely to be able to find one.
Housing charity Shelter4 point out that this requirement is particularly impacting low-income families or those facing homelessness, whose friends and families are themselves struggling financially and so unable to act as a guarantor. They state: “the ability to find someone who earns enough to act as a guarantor is restricted for people on low incomes and those who are homeless.”
This is leading to landlords rejecting the tenancy applications from those on lower incomes; Shelter’s research found that tenants on housing benefits were four times more likely to be turned down for private rentals because they could not find a guarantor, compared to those not on housing benefit.
A survey of landlords by homelessness charity Crisis5 found that landlords were asking for guarantors because they deemed it a risk to rent to homeless tenants. 82% of landlords stated they were unwilling to rent to those experiencing homelessness, with 80% of those landlords fearing rent arrears. Landlords saw guarantors as a way to mitigate this perceived risk, with 34% saying they made more use of guarantors when to renting to someone experiencing homelessness.
Not only is it almost impossible for a young person battling homelessness to find a guarantor, but this requirement might actually be perpetuating homelessness by making basic housing harder to attain.
A recent article by the BBC6 follows the story of “Daoud”. The young man knew no one who met the criteria for being a guarantor. As a result, his landlord asked for six months’ rent in advance, followed by another six months’ partway through the year. This was untenable for Daoud and he feared homelessness as a result.
Barnardo’s7 agree that finding a guarantor is a significant challenge for young people who don’t have family members who can act in that capacity. They also share experiences of young people ending up in poor-quality unsafe accommodation because they are the only properties that do not require a guarantor.
For youth charity Step by Step8, the requirement for a guarantor is yet another hurdle young people must overcome when looking for affordable housing. They point out that young people already face a significant disadvantage as a result of lower rates of Housing Benefits than older groups, Local Housing Allowances that do not cover rent costs, and discrimination from landlords who perceive older, more established tenants as less of a risk.
Centrepoint9 agree that young people facing homelessness are particularly impacted by the increasing requirement for rent guarantors. Their survey of landlords found that 63% would be more likely to let to a homeless young person if they had a rent guarantor.
This is a stark figure for a young person in transient circumstances, without close family who might act as a guarantor. It is young people in such situations that are supported by Step by Step.
Having worked with thousands of young people over the last three decades, Step by Step have witnessed first-hand the challenges young people face. They see the requirement for a rent guarantor as an additional, insurmountable hurdle.
Chris Furness is a Support Worker in the charity’s Supported Lodgings service. This finds homes in the community for young people who would otherwise be homeless. It is when young people go to move on to independent living, that the guarantor issue is most keenly felt.
“Often the reason a young person is referred to Supported Lodgings is due to them having no family support or difficulties in their family structure,” Chris explains. “It seems unlikely that a young person would have a friend or extended family member who would take on this responsibility or be in a position to do so.”
This view is echoed by Step by Step’s Launch team, who offer young people advice and practical support on a range of issues, including housing. Hannah Adams-Cox, Launch Lead, explains: “Most of the young people we support don’t have family connections or friends that would be within the guarantor threshold, so it’s essentially a no-go from the beginning.”
Jason (not his real name) is just one of the young people supported by Step by Step who has experienced the issue of requiring a rent guarantor.
Jason’s View
“It’s already very hard for young people in this economy, and the fact is that landlords want older people who have more work history and experience, because they don’t trust young people to pay the rent or the deposit. Young people need to be given the chance.
“Once we have met the landlord, we get a chance to view the property, and it goes well and they want you to have the room! One big problem, though – they ask for a guarantor. A guarantor is a family member who can pay your normal rent if you can’t. And here comes the problem: many young people in care, like myself, have no family or relatives who can afford it, and as such most landlords won’t progress with you.
“It makes the whole thing a waste of time and a very frustrating experience.”
Lisa Chrichard, Step by Step’s South West Supported Lodgings Manager, is explicit about the correlation between guarantor requirements and youth homelessness.
“How can a young person find somewhere to live when they are vetted so thoroughly, have a low income and no guarantor? Society is making it impossible for the younger generation to succeed in life. The more barriers there are, the more youth homelessness there will be.”
There is help out there for young people struggling to find a guarantor. But this support is patchy, not statutorily mandated, and sometimes simply not the right choice for a young person already in challenging circumstances.
Current guarantor providers can be split into two camps. Firstly, there is the public sector, often confusingly referred to as “corporate guarantors”. Secondly, there is the private sector, comprised of fee-charging guarantor companies.
In 2021, the Government10 commissioned a review of the children’s social care system in England. Among other measures, the review recommended the implementation of a national rent guarantor scheme.
The Government went on to introduce its Stable Homes Built on Love plan in 2023, but this did little to address the issue of rent guarantors. The plan merely pledged to “encourage” local authorities to offer support to care leavers with this issue. That is, it did not mandate that local authorities should have a rent guarantor scheme available, and there was no provision for non-care leavers.
Although this rather limp implementation of the review’s recommendations does not require local authorities to do so, some have gone on to introduce their own rent guarantor schemes.
Southampton County Council11 is one such local authority. Their Corporate Rent Guarantor Policy states that “many parents offer to be rent guarantors to support their children move into their own tenancy. Under this scheme, the Council can act as a Corporate Rent Guarantor for eligible young people, where there is no family member willing/able to do so.”
However, this policy only applies to care leavers, which the council has a responsibility to provide provision for, not young people in general. Young people who find themselves homeless as a result of circumstances other than leaving care, are not catered for.
While the Southampton scheme does not go far enough, many local authorities do not have a rent guarantor scheme at all.
Step by Step Support Worker, Chris Furness, summarises the situation: “If a young person is a care leaver, then they at least have a chance of the local authority acting as guarantor. But this is not available in all local authorities, and still means that non-care leavers need to identify their own guarantors.”
If councils’ corporate rent guarantor schemes are not sufficiently addressing the issue, what about the role of private companies offering equivalent services?
These private guarantor providers can be used by a tenant who is unable to find a guarantor elsewhere, while at the same time giving a landlord the assurance that missed rental payments will be covered. However, PropertyLoop.co.uk12 point out the disadvantages with using such services: “To say that these services come at a cost is an understatement, often coming at the expense of hundreds of pounds to the tenant, adding another high financial barrier to their rental journey. “
It’s also worth noting that many private guarantor companies require the tenant to obtain a co-signatory before they agree to cover the rent. Young people such as those supported by Step by Step, facing homelessness or other dire circumstances, are likely to struggle to find a co-signatory, just as they are unable to find their own guarantor in the first place.
It is clear that neither the current local authority provision, nor the services offered by the private sector, offer a complete solution to the current barrier to rental accommodation that so many young people are struggling to overcome.
1. The introduction of a national rent guarantor scheme which all local authorities are required to offer.
As previously noted, current legislation encourages local authorities to provide a rent guarantor scheme without making it a requirement. This has led to an inconsistent patchwork of provision. Step by Step would like to see it mandated that all local authorities will act as a Corporate Guarantor where a young person is unable to find a guarantor of their own.
2. Ensure these schemes are accessible and well-advertised
The experience of Step by Step’s Launch advice service is that often young people do not know what help is available to them. Local authority corporate guarantor schemes would need to be readily accessible and well sign-posted to ensure that the provision can be found by those that need it, at the point they need it.
3. Allow all young people leaving supported accommodation the same support currently available for care leavers
Care leavers in England are afforded special status, meaning that local authorities have a duty of care and are statutorily required to provide services and support post 18. One of these services is the local authority acting as a corporate rent guarantor, where this provision is available.
Step by Step would like to see the same consideration for housing support offered to all young people leaving supported accommodation, including those leaving the charity’s Supported Lodgings service. This would extend the local authority’s services to a wider pool of vulnerable young people, allowing them access to additional support, such as corporate guarantor schemes.
The hurdles faced by young people looking for private rentals are as many as they are steep. If the further challenges of homelessness and financial insecurity are added into the mix, then it is easy to paint a damning picture of the rental sector’s accessibility for young people starting out on their own.
The requirement for rent guarantors is one barrier too many for young people already struggling to make a life for themselves. This barrier can be removed with the introduction of a national rent guarantor scheme. It won’t fix a broken housing sector on its own, but it might just help more young people realise the currently elusive dream of a place to call home.
References
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