Do you need to reference students’ guarantors?

Guarantors play a crucial role in the student rental market. A guarantor is an individual, often a parent or guardian, who agrees to pay the rent if a tenant fails to do so. 

Simply having a guarantor in place is not enough. To properly assess whether a guarantor is reliable, it’s important to reference them. To help, we’re breaking down everything you need to know about guarantor referencing for student tenancies. 

Why should you reference students’ guarantors?

Students often lack the financial stability that landlords typically look for in tenants. They may not have regular employment and may never have rented before, making it difficult to assess their reliability as tenants via traditional referencing and credit checks. As a result, guarantors are extremely common in the student market. Guarantors provide an extra layer of security for landlords and property managers as they step in to cover the rent if the student fails to pay. 

It's crucial to ensure that the guarantor is capable of fulfilling their financial obligations. Thorough guarantor referencing can provide this assurance. By verifying their financial situation and reliability, you can mitigate the risk of missed payments and potential financial losses.

How long does guarantor referencing take?

The process of referencing a guarantor is generally straightforward and typically should take no longer than 48 hours. However, the exact duration can vary depending on the number of checks performed by the landlord or property manager.

If the guarantor has all the required information and documentation ready, the process is more likely to be smooth and efficient. Delays can occur if third parties, such as employers, are involved in providing references, as their response times can vary. Efficient communication and preparedness are key to expediting the referencing process.

What should you check when referencing a guarantor?

When referencing a guarantor, you should carry out these key checks:

Proof of identity and address

The first step is to verify the guarantor's identity and address. This typically involves checking government-issued identification and utility bills or other official documents that confirm their residential address. Ensuring the guarantor is who they claim to be is a foundational step in the referencing process.

Credit checks

A credit check provides insight into the guarantor’s financial history and reliability. It reveals their credit score, outstanding debts, and any history of bankruptcies or financial difficulties. A good credit score indicates financial responsibility, increasing the likelihood that they will be able to cover the rent if necessary.

Income verification

Verifying the guarantor's income is crucial to ensure they have the financial means to cover the rent. This can be done using OpenBanking, which allows secure and direct access to their bank statements. Reviewing their income streams and financial stability provides a clear picture of their capability to meet the financial commitment.

Expenditure checks

In addition to income verification, it’s important to assess the guarantor’s regular expenditures. This helps determine their disposable income and whether they can realistically afford to cover the tenant’s rent if required. High levels of existing financial commitments might raise concerns about their ability to take on additional responsibilities.

Employer references

Finally, obtaining references from the guarantor's employer can provide additional assurance. This involves confirming their employment status, income, and job stability. Employers can also provide insights into the guarantor's reliability and character.

What if a tenant can’t provide a guarantor?

Tenants might not be able to provide a guarantor for several reasons. For instance, it’s common for international students to struggle to find a suitable UK-based guarantor. If a tenant cannot provide a guarantor, you could consider using a commercial guarantor service, like Leap. Leap integrates seamlessly with Concurrent, our property management software, allowing you to provide tenants with a guarantor waiver as part of their booking journey. You will have full security against defaults, even if tenants can’t provide a guarantor. 

Make guarantor referencing simpler with Canopy and Concurrent

Referencing a student tenant’s guarantor is a critical step in the rental process, offering peace of mind to landlords and property managers. If you want to streamline the referencing process, Concurrent facilitates integrated, in-platform referencing and credit checks through our partner, Canopy. Speed up the referencing process, stay compliant, and ensure peace of mind with cutting-edge referencing technology. 

Want to find out more? Book a demo today.