A guarantor agreement is one of the most valuable tools in a landlord's armoury. When a tenant's income or credit history does not quite meet your referencing requirements, a guarantor provides an additional layer of financial security. With the Renters' Rights Act 2025 making all tenancies periodic from 1 May 2026, understanding how guarantor agreements work in this new context is more important than ever.
What Is a Guarantor Agreement?
A guarantor agreement is a legally binding contract between the landlord and a third party (the guarantor) in which the guarantor promises to meet the tenant's obligations under the tenancy agreement if the tenant fails to do so. This typically means the guarantor is liable for unpaid rent, damage to the property beyond fair wear and tear, and any other financial obligations. The guarantor does not become a tenant and has no right to occupy the property. They simply provide a financial backstop.
When Should You Require a Guarantor?
Common situations where landlords require a guarantor include:
- The tenant is a student with no income or limited credit history
- The tenant is new to the UK with no UK-based credit file
- The tenant is self-employed with variable income
- The tenant has a low credit score or county court judgements
Guarantors allow you to let to a wider pool of tenants while managing your financial risk.
Key Clauses to Include
A well-drafted guarantor agreement should include:
- Clear identification of the parties: landlord, tenant, and guarantor
- A specific reference to the tenancy agreement the guarantee relates to
- A statement that the guarantor has read and understood the tenancy agreement
- The scope of the guarantee: the guarantor is liable for all the tenant's obligations including rent, damage, and other sums due
- A clause stating the guarantee continues for the duration of the tenancy, including any periodic continuation
- An indemnity clause making the guarantor liable as a primary obligor
- Provisions for the guarantor to receive notice of any default by the tenant
- The guarantor's address for service of notices
Guarantor Liability and Periodic Tenancies
This is the area that causes the most confusion, and it becomes especially relevant under the Renters' Rights Act 2025. Historically, a guarantor agreement for a fixed-term tenancy might only cover the fixed term. When the tenancy became periodic, there was a question of whether the guarantee continued.
In K/S Victoria Street v House of Fraser [2011], the Court of Appeal held that a guarantee does not automatically extend to a new tenancy or statutory periodic tenancy unless the guarantee agreement expressly provides for this. This means that if your guarantor agreement only covers "the tenancy granted by the agreement dated X," it may not cover the periodic tenancy that arises after the fixed term ends.
Under the Renters' Rights Act, all tenancies are periodic from the outset. The guarantor agreement must be drafted to cover a periodic tenancy that could continue indefinitely. It should expressly state that the guarantee covers the entire duration of the tenancy, including any statutory periodic tenancy, continuation, or variation.
Are Guarantor Agreements Still Valid Under the RRA?
Yes. The Renters' Rights Act does not abolish or restrict guarantor agreements. You can still require a guarantor as a condition of granting a tenancy. The Tenant Fees Act 2019 does not prohibit guarantor requirements either, provided you are not charging the guarantor a fee.
Enforcing a Guarantor Agreement
If the tenant defaults and you need to call on the guarantee, write to the guarantor notifying them of the default and give them a reasonable period (typically 14 days) to pay. If they do not pay, pursue a claim in the county court. For amounts under £10,000, use the small claims track. Keep detailed records of all rent payments, arrears, and correspondence.
Practical Tips
- Have the guarantor agreement as a separate document from the tenancy agreement
- Ensure the guarantor has the opportunity to seek independent legal advice
- Verify the guarantor's identity and financial standing during referencing
- Ensure the agreement expressly covers periodic tenancies and any continuation
- Send the guarantor a copy of the tenancy agreement
- Update the guarantor if the tenancy terms change significantly
Take Action
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For more on financial aspects of letting, try our Deposit Cap Calculator to confirm your deposit is within legal limits, or read our 5 Things Every Landlord Must Do Before May 2026.