Guarantees and Parent's Financial Liability

As part of the tenancy agreement, some landlord/agents will present students with a guarantee and ask them to get your parents to guarantee their rent. If you are given one of these to sign, read it very carefully first. It is very important that any such guarantee specifically limits your financial liability to just your son's or daughter's rent/damages. Unipol has prepared a model guarantee that does this. Before anyone signs, it is important that you and your child understand that if there's a default on the payment of rent or the cost of damage, you, as guarantor, will be responsible for making payment.

Model Guarantee Form for individual limited liability in a joint contract

Model Guarantee Form for individual contract
 
It is also important to understand that if your child enters into a contract with joint liability and you sign a general guarantee, you are exposing yourself to a significant financial risk. If another tenant moves out or fails to pay the rent, you could be taken to court under the terms of the guarantee, even if you or your child has paid your child's rent. The advice to students is: don't ask your parents to enter into any guarantee which does not specify the limit of financial liability being guaranteed.

About 36% of bed spaces rented to students in Leeds and Bradford are let by landlords asking for guarantees, so there are plenty that don't impose this requirement. The use of guarantees is prevalent in larger developments and among landlords with only one or two houses, where rent default would mean a loss of a significant part of their income. If your child has a credit rating or a reference from a previous landlord to provide comfort to a potential new landlord, then many landlords may reconsider their request for a guarantee.

If a student has no parents or obvious guarantor, they should raise this with the landlord concerned. Many will be willing to accept that, in these particular circumstances, a guarantee may not be necessary and other arrangements may be more appropriate.

For international students, a parent who is abroad is also unlikely to be appropriate because legal proceedings to enforce any arrangement outside the UK can be difficult.

If a student is asking someone else to be a guarantor, they (the someone else) should seek advice before signing any documentation. Generally, supervisors and tutors should always refuse to enter into these obligations, because it creates a financial relationship between them and their student which could cause a conflict of interest later.