Decision: Accept with Guarantor
What does this mean?
- Tenant earning less than target, calculated on confirmed contracted hours, no overtime or bonus included (commission included if in role for over a year, 6 months’ payslips required, average taken).
- Several attempts made over 5 working days to obtain employment/income references with no response – Finish chasing after 5 working days.
- References can’t be compliantly taken – no business email and/or landline, referees are family members, no payslips or proper contract, etc.
- Has a CCJ (or several) under £10K – may be earning over target rent or not at all, either way CCJ makes their ability to pay their share of the rent ‘suspect’.
- Landlord reference doesn’t affect it unless they’re tied into a contract that will extend into the upcoming tenancy (bad reference is always a decline).
- Tenant on fixed-term contract finishing within tenancy term – can’t be certain that they’ll have their contract renewed (may be too far away from renewal date for this to be offered and accepted).
- Tenant may be self-employed under 12 months (need them to be self-emp over a year for either accountant reference, tax return or 6 months of personal bank statements), or only have business accounts as evidence (Upad don’t accept business accounts, only personal).
- Tenant may be on zero-hours contract (no confirmed hours, even if tenant has worked there several years and always had the work this can’t be taken into account).
- Student with no acceptable funding (can’t use loans, only grants and bursaries, also can use state funding if coming from abroad).
- Unemployed (can’t use housing benefit as eligibility varies, amounts vary per area, only confirmed when AST signed), not all benefits qualify for referencing.
- Tenant can’t be found on credit check, either if evidence not supplied, not sufficient, or if checks are inconclusive (different to zero score as credit is expected for this person but just cannot be found, as opposed to not expected and nothing found anyway).
- Has been checked and has been determined as either not being able to definitely cover the rent for the full tenancy term or has previously not covered credit obligations – either way a guarantor is required to cover this likelihood of not paying the rent.
Implications?
- Upad have determined that great assurance and protection will be required based on the tenants referencing.
- Ideally to be accepted with a Guarantor who can cover liabilities for rental loss in the first instance.
Options?
- Landlord can reference a guarantor if the tenant has one willing to stand for them, earning 3 times their share of annual rent with clean credit for last 6 years.
- Depending on circumstances (contract finishing in high-paid industry where tenant has worked a long time, landlord sure tenant receives tips, bonuses and overtime, tenant only slightly short of target, etc) the landlord can accept them either with rent up front, break clause, or just as normal if otherwise happy with them.
- They can turn them down if unhappy with reasons – esp CCJs, but would be worth exploring all options.
- They should ask for evidence relating to CCJS – won’t affect how Upad see it as the tenant got a CCJ but they may view things differently if it has been paid off or is still outstanding, and also depends on what it is in relation to (nasty ex partner, bad business dealings, etc).
Rent Protection Insurance Eligibility?
- Should the tenant provide a guarantor who has successfully passed Upads referencing there is a greater eligibility of RPI being available.