One in five guarantors is walking away from signing a guarantor agreement due to joint liability for rent in HMOs, says rent arrears protection service Only My Share.
The service says student letting agents are reporting that around one in every five guarantors is now disputing the element of the tenant’s guarantor agreement that holds them jointly liable for the rent.
Edmund Fulford, Relationship Manager at Only My Share, has commented: “Many students rent in Houses of Multiple Occupation, known as HMOs. Under a joint and several liability clause in a tenancy agreement, if one tenant doesn’t pay their rent, everyone else becomes liable for it. With awareness of this growing, along with a fragile economic backdrop, there is an increasing reluctance by many individuals to sign up as guarantors.”
Agents are reporting having to spend hours on the phone explaining joint and several liability clauses to potential renters and their guarantors. Others have been forced to remove such clauses from tenancy agreements altogether.
Only My Share has been working closely with agents to deliver a solution. The company’s rent arrears protection offering means that the tenant and their guarantor will not be liable for a housemate’s unpaid rent. The service describes it as a ‘game-changer for many renters as it delivers peace of mind’.
Fulford has commented: “There are two key factors at play here. One is the wider economic picture that has resulted from the pandemic. Income insecurity is giving many people pause, whereas previously they would have just signed on the dotted line. But we are also working hard to raise awareness about joint liability. We’re working with universities and student unions in order to make students – and their guarantors – more aware of what it is that they are signing up to when they rent rooms in HMOs.”