Episode Transcript
[00:00:00] Speaker A: Foreign let's Talk let's an original podcast from the Lettings Hub. Hello and welcome to the latest episode of our podcast, let's Talk Let. I'm Heidi, the CEO of the Lettings Hub, the tenant referencing business that got good at tech. Let's Talk Lets is our regular roundup of news and views on a whole range of subjects spanning the private rented sector. Today I'm delighted to be joined once again by Ryan Heaven, a consultant solicitor from our legal services provider, Woodstock. Now, Woodstock Legal Services are a really important partner for us at LettingShub. They provide us with all the legal services and advice when our agents and their landlords need to make a claim or need any legal support. Myron also specialises in evictions, tenancy law and compliance and he's perfectly placed to help us navigate what we're talking about today. And just before I talk about what we're going to talk about today, some of you may remember Ryan as a previous guest and we had brilliant feedback on the pod because we only spoke about one thing which was evictions and the process of gaining possession of a property and going to court. And we spent a whole pod just talking about that one thing. And today we're going to do exactly the same and we're going to talk about one subject which Ryan is not only a specialist in, but he feels quite passionate about and that is about guarantors.
So let's get started. Welcome to you, Ryan, and can you just remind our guests of a little bit about your kind of history and then we'll kind of get talking about gum tours.
[00:01:38] Speaker B: Thanks, Heidi. I think you covered most of the key points in that, so thanks very much. I was blushing slightly through parts of it and yeah, we had this last podcast, didn't we, where we had the best of intentions to cover so many different topics and we simply ran out of time. So here we are, pod number two, to try and drill down into this particular topic. So, as Heidi said, I'm a solicitor of Woodstock Legal. I've been working in this kind of residential letting sector for about 10 years now and in that time I've been doing evictions, debt claims, preparing, documentation, training.
The way I like to phrase it is basically anything a letting agent might need, I like to think I'll be able to provide. So hopefully I can give, give some good, good feedback and insight today into guarantors.
[00:02:25] Speaker A: Brilliant. Okay, so let's get started with the basics then. In simple terms, what is a guarantor? Why do we need one in the first place. And why is their role, I guess going to become even more important with the upcoming Renters rights bill legislation on the horizon?
[00:02:41] Speaker B: So guarantor is just basically any third party to a tenancy agreement and that person kind of takes on the responsibilities of the tenant in the event that the tenant fails to meet their obligations.
A guarantor can live at the property though it's unusual because that's basically a tenant, but it doesn't preclude a person from being a guarantor. But it's really unusual. So you need to think widely about this isn't just someone, it doesn't have to be a family member or a friend. It could be any third party who just says I'm going to stick my neck out and be responsible in the event that the tenant.
[00:03:22] Speaker A: Is that specifically in regards to not paying their rent in full or on time or is it wider than that?
[00:03:30] Speaker B: So this comes down to the guarantor agreement. So the guarantor agreement will set out what the guarantor is responsible for, how long they're responsible for it. And most commercial guarantor agreements, I mean most letting agents will have their own, most software providers will have their own, but they all basically say the same thing, which is a guarantor's response for everything that the tenant is responsible for basically for as long as the tenancy exists.
[00:03:55] Speaker A: Okay. And with the new legislation upcoming, why I guess have we decided to do a podcast on guarantors today? Why is it going to become so topical? And I think I've used the word guarantor more in the last few months than I have in my 20 years in this industry.
[00:04:13] Speaker B: Yeah, I hear that a guarantor, you think about what the purpose of it is, is it's meant to reduce the anxiety of the landlord about letting someone live their property. At the moment landlords anxiety is at an all time high. They're worried about what renters rights might look like. They're worried about the possibility of saying goodbye to Section 21 notices forever and the possibility of therefore letting to a tenant basically for life. It's open ended. They the tenant lives at that property for as long as the tenant wants to. And as long as the tenant is complying with with their obligations, the landlord has no real way to evict unless they want to to sell and move back in. And that simply might not be something landlord wants to do.
So yeah, landlords are worried, guarantors ease worry. And so yes, at the moment there's a lot of talk about what guarantors do. Guarantors are also relatively unregulated. They very rarely actually crop up in legislation.
There's a bit in the renters rights bill about guarantors and what happens if a tenant dies. But generally if you do control f on any bit of legislation you search for the word guarantor, you're not going to find many, many bits. It's really just a matter of contract law and in that sense is pretty unregulated relative to everything else that is regulated in the prs.
[00:05:33] Speaker A: Yeah, and I guess guarantors obviously, you know, as a referencing provider we have three statuses I guess of referencing report which is accept, decline or yes, we recommend you can proceed but with, with a guarantor. So whenever promoting that, about 15% of references go back with that status on an individual tenant. Considering there's about two tenants that move into every property, you can see how actually it becomes quite commonplace. And for landlords, a lot of them will not be able to get insurance if a guarantor is recommended on that referencing report unless they then go and actually get an acceptable guarantor. And for guarantors there's two types of way to assess their affordability. Referencing companies either run it pretty much in line with the tenants affordability or is slightly higher knowing that a guarantor has obviously got their other financial commitments to pay. But I think one of the reasons it's become so topical lately is based on the direction of travel. On the renters rights legislation, advance rent or shortfall of rent payments are going to be removed or very likely to be removed. And therefore at the moment with within the lettings hub and I don't think it's particularly different outside of us, 7% of our tenancies are just kind of taken rent in advance. And that's for a variety of reasons. But if a tenant doesn't have that option and they're not meeting the criteria to pass alone, I guess guarantors are going to become even more critical for that tenancy to go ahead.
[00:07:04] Speaker B: Yeah. So the, the referencing industry and the insurance industry have kind of created this, this, this construct, this machine which is now quite slick, which is that an awful lot comes down to what the referencing report says you ought to do. Because in principle a landlord can insist on a guarantor for any tenancy.
And accepting that some tenants might not want to engage with a landlord who insists on doing that, most tenants recognize that if they're below a certain line, if the algorithm says no or yes with conditions, then they're going to have to find someone who's willing to put themselves out there as a guarantor. And this particular pack of a lower end of the market, I see it quite a lot in central London. If you have people come from overseas renting particularly high rental properties, those people quite often have the funds to stump up the cash, don't they? They can pay that rent in advance. But at the lower end of the market where they do not have those funds available, then then a guarantor is basically essential. It's the only way they're going to be able to rent a property or a land's going to be feel willing to take the risk on them as opposed to someone who perhaps doesn't require a guarantor.
[00:08:14] Speaker A: Yeah. And we're seeing more guarantors go through the process and then get declined than ever before, mainly because the rents have risen so much. So rents have risen and therefore some guarantors just can't afford. And actually some guarantors don't want to stand as guarantor, which I think has always been the way for some people. But also, like I said, some agents now insist on a higher affordability for a guarantor or require a guarantor even for a tenant that might have an acceptable referencing report but still want some added security. And that could be down to a landlord's personal preference based on. Well, I don't like the fact that these tenants only scrape affordability criteria or, you know, it's a couple, but they haven't been together very long and it's their first house and actually if they split up, fall out, neither one can afford it on their own. So, you know, there's a lot of reasons why guarantors are asked for, not just based on, you know, I guess, our recommendation.
[00:09:18] Speaker B: Yeah, you can certainly see that if the algorithm says that a person should be. Is acceptable, perhaps only just then really that just comes down to what the algorithm, you know, a digit in some code somewhere that says that this level of affordability is okay and this is a pass or a fail.
The analogy I sometimes give is, you know those speeding cameras that have like a smiley face or a frowny face and then if you're going say 31 miles an hour, not if I have a word as a lawyer, I've never speed. But if you say if you were going 31 miles an hour, it gives you a frowny face. But if you go to 30 miles an hour, you get a nice smiley face. The one mile an hour was really not that much of a difference. Was it? But for, for that kind of binary pass or fail, accept or decline algorithm, it makes all the difference in the world. So, yeah, so maybe landlords can't be reassured even if, even if a land, even if a tenant passes their referencing, that they can actually meet the. Meet the demands of the contract.
[00:10:17] Speaker A: Yeah. And we have, you know, we have some agents, not very many, but we have some where they say, look, if a tenant falls into the criteria of needing a guarantor, then they're not moving into that property. They don't actually accept tenants that need a guarantor. So because of maybe some of the reasons that we're going to talk about as we kind of go through today and this pod and then we have another agent that actually insists on a guarantor on every tenancy and their view is, well, why wouldn't I? Why wouldn't I?
[00:10:44] Speaker B: I can see that if you've got another person who you can potentially hold liable, then yeah, great, no downside.
[00:10:50] Speaker A: And I think they view it that a. There's another person to hold liable. You're completely right. But there's also a personal relationship usually between that guarantor and the tenant. And therefore does the tenant feel a little bit more responsible and a bit more reliable, I guess, for the agent in making sure the rent is paid and in on time because they don't want mum, dad, nan, granddad, you know, partner, best friend, boss, to find out that there is obviously a situation. But anyway, let's kind of move on. From a legal point of view, let's kind of very much get into the nitty gritty when an agent or a landlord obviously gets a guarantor agreement set up. So obviously there is that that runs separate to the AST or the tenancy agreement. What is actually really important in drawing up that agreement and what, I guess the key criteria or the top tips that you can give the listeners.
[00:11:44] Speaker B: The first thing will be the format of the document itself because people will have encountered deeds of guarantee and then they will also have encountered things like guarantor agreements and you might say, oh, what's the difference between those two things? Actually, legally, it's really important for distinction between those things. And particularly in the modern age where a lot of people want to electronically sign things and you can't electronically sign deeds, there's been, there's been a real rise of guarantor agreements. Now this is stuff, it's basically covered in the first week of law school in terms of it's basic contract law.
And I'm sorry I'm going to get awfully technical for a second, but there isn't actually a good way to explain this other than by being technical. So there's this concept called consideration in contract law, which is basically like the thing that you, that you are, that you are committing or providing to the contract.
And with a landlord and tenant relationship, it's quite clear what the consideration is. The landlord's providing the house and the tenant is providing the rent. That's all good. So what's the guarantor providing in the contract? They are providing some assurance to the landlord that this tenant's obligations will be met. And then I guess the question is, what are they receiving from the contract? Well, you've got to assume that the guarantor wants the tenant to move into the property, otherwise why would they agree to become a guarantor at all? Now, this is where we get technical and it's this phrase of past consideration is no consideration. Now what that means is that if you've done something already, that can't be your consideration for the purposes of a future contract. So take a guarantor agreement then, where you have this kind of consideration element. If the tenant signs a tenancy agreement before the guarantor signs whatever they're obliged to sign, it's a guarantor agreement can kind of be integrated into a tenant agreement. Fundamentally, it's the same thing.
In that scenario, the guarantor is not getting anything from the contract because the tenant has already basically signed the contract they've had the opportunity to sign. So if a guarantor isn't getting interested in the contract, they're not bound by requesting contract. And this is a really tricky and technical and I'll just say pedantic thing, but basically, if you're not signing it by deed, and all electronic guarantor agreements will not be signed by deed, but the guarantor always has to sign first so that they are getting something from the contract. Otherwise, if the tenant signs first, the guarantor isn't getting anything from the contract and they can just walk away, no strings attached. So it's, it's quite a stark and, and brutal trap that a lot of people will walk into just because they don't know this, this nuance of it. They would just think our deed, guarantor agreement, same thing, just get them signed up and we can get it all done. It doesn't really work like that, to be honest.
[00:14:37] Speaker A: And I'm gonna, I'm gonna plug Box here unashamedly because Box forces the guarantor to sign before the tenant if there is a guarantor for that very reason, and to make sure that, you know, things just don't get sent out on email and then you get the signatures back and then, you know, you don't really know which one came in first or you need to put them together. Now, we often see tenants, you know, in looking for a guarantor, and like you said, it could be anybody, actually, but mainly it's a family member that would typically act as a guarantor. But it's not always, obviously, a straightforward ask, I guess what do agents need to consider when someone is offering to be a. Be a guarantor?
[00:15:15] Speaker B: That touched on this a little bit. My last answer is that the guarantor has to want the. The tenant to get this property. And usually that will only come from a close family or friendship relationship. So, yeah, innately, and it's particularly true if you think about the sector which most likely requires guarantors, which is students. It's nearly always the parents, isn't it? Because the students themselves will not have the means to pass referencing and they won't necessarily have many friends who can meet affordability criteria or are willing to stick their necks out and become liable for them. Particularly, students might not have the best reputation for meeting their contractual obligations. So, yeah, the family and friends aspect is kind of innately tied into the guarantor because the guarantor has to be willing to perform the contract if the tenant doesn't. And that can lead to some unpleasant conversations between family members.
[00:16:12] Speaker A: And I mentioned earlier that I've obviously talked about guarantors way more now than I have done in a long time. And that's mainly because we're going to come on to talk about professional guarantor and how they've kind of come about in, in more recent times. But the more I've thought about it, actually making sure that, I guess a guarantor is vetted, and I'll say reference, but also vetted more than that by the agent or the landlord to make sure that they are suitable, I think is really, really important because what happens is a guarantor signs in obviously at the beginning of a tenancy to say, like, like you said, Ryan, that they're willing to, and they want that tenant to have the property and they believe that tenant's going to be a good tenant and do all the right things and therefore they're willing to stand by them. But actually, we don't really know how that that guarantor's circumstances have Changed. So the agent is obviously quite close contact with the tenant. They're doing inspections, they probably have the tenant on the phone at times about maintenance. They are seeing firsthand whether that money isn't in, is it or not? In, in, in the bank account. And I also imagine the tenants tell the agent their personal stories at times. But a guarantor is completely removed. I don't think an agent ever meets them, they don't really ever talk to them.
But actually that guarantor, even after one day of the tenancy starting, they could die, they could move abroad, they could fall out with said tenant. That tenant could have paid the guarantor to act as their guarantor.
And actually what we never know is whether that guarantor, that person is acting as guarantor for that one tenancy or many. You know, there is no kind of cross checking to say, okay well you know, this guarantor might have rent or mortgage of their own and they've also already acting as guarantor for their son and now we're asking them to act as guarantor for their daughter and their son in law and their, and their mother, you know, when she needs to move into different accommodation. There is no way of knowing actually what financial liability is against one individual at any one time. And it's really, I suppose brought into the forefront of my mind that how valuable actually is a personal guarantor? I don't know what your response would be Ryan, to that.
[00:18:33] Speaker B: I definitely hear what you're saying is that circumstances can change immediately and sometimes the guarantor is not worth the piece of paper that it's written on. I mean ultimately that's true for any agreement that you can't enforce.
That's the same can be true for tenancy groups sometimes if a tenant leaves with massive rent arrears and they say leave the country or they go, they go bankrupt or we simply can't be located, then it's academic how much they actually owe you because you're not going to get that money back. Now the purpose of guarantor I guess is to maybe share that burden somewhat or so the land doesn't have all their eggs in that one basket, they have someone else who they can pursue. But yeah, you're quite right. Is it basically if the day after we signed a guarantor agreement the guarantor dies, then practically speaking there is no guarantor because the prospects of actually being able to recover anything from the deceased estate quite remote.
Yeah, it's a tricky thing, but I suppose on the other hand, without appearing to be too flippant about it, what more can you do? Can you insist on multiple guarantors? I mean, you can, but again, there's perhaps a reason why the market doesn't do that. It's because it's been totally unpalatable for a lot of prospective tenants. So you simply get fewer inquiries, be harder to rent property, you maybe have to lower the rent. So there's a balancing act between the landlord wanting to protect themselves from all possible scenarios and the reality of what any given tenant will accept.
[00:20:02] Speaker A: Yeah, and we definitely see, you know, through referencing and obviously through box, where they go on to then, you know, set up the tenancy, sign the agreement.
Lots of tenants, you know, get an acceptable decision with a guarantor and then disappear from the process because they can't get one.
And we see that, you know, I guess, all too, all too commonly. But I think one of the key things that is also going to change is at the moment when a tenancy is started, it's entered into a fixed term. And when a guarantor signing the agreements or the deeds, as you explained, they near enough believe they're signing in for a period of time, a fixed period of time, where they're guaranteeing in the new world under the new legislation. I guess that's all going to change.
[00:20:48] Speaker B: Well, I think this is an area of law that's begging to be looked at seriously, because you're right, some guarantors go into these things thinking that they're only responsible for, say, the fixed term. But if the guarantor agreement doesn't reflect that, then they're basically liable in perpetuity. And I think that's the area if a guarantor, or just let's phrase it like this, how does the guarantor end their liability if the guarantor agreement just basically says they're liable for as long as the tenancy is? And the answer to that is, well, they can't, if they don't have any kind of notice provision or there isn't any kind of fixed term which might end, then that they're on the hook forever, which innately seems perhaps unfair. And if we talk about unfairness, there's all kinds of regulations to protect consumers in the event that they have entered into a contract which is unfair. So there's nothing at the moment which entitles the guarantor to give notice to end their agreement unless it's within the agreement itself.
However, you can absolutely foresee a scenario in the future where a guarantor is going to say well hang on, I signed up to this thing like 10 years ago.
Why am I responsible for this? Or why are you coming to me? Why can I not give notice? And in fact I've encountered claims in the past where guarantors have claimed to have given notice and you just say well how, what's the mechanism for that? And you get very, very close to basically going to court on the basis of is this an unfair contract term or not. I've not taken a case like that to court yet because I think both sides recognize that there is a real risk that if it goes to let's say the court of appeal, they're really high up court, there's costs involved, there's time involved and we might be talking about debt, say 2 or 3,000 pounds. It's not worth, it's not worth going that far for that kind of debt when you're better off maybe just splitting different, say okay, if let's, let's say you will take half of the money from you instead and walk away and save everyone the palava. That's what kind of tends to happen. It's very difficult to say that it's worth going to court from either side given that there could be a real risk of this going all the way to the top and then the costs involved in that.
[00:23:02] Speaker A: And obviously if a tenant is evicted there's obviously a subsequent process that someone could take which obviously puts a CCJ against the tenant's name. Obviously that costs more money and is another kind of step afterwards. Can the same happen for a guarantor?
[00:23:19] Speaker B: Yes. So the guarantor is on the hook for it just to see as, just as the tenant is. So if it's possible to get a CCJ against a tenant, then it's also possible to get one against a guarantor. You can include them both on the same claim. They don't have to be distinct, you don't have to choose one or the other. I mean I will say you would usually go after the guarantor because they're more likely to be in a better financial situation. But you have six years to bring a debt claim against someone. An awful lot can happen in six years. So imagine if you just have a student doesn't have necessarily a penny to their name going into something, going into a tenancy, therefore they need to guarantor. But six years from the, from when they became a student, they might well get a high flying job. They might well be far better off than the person who was originally guaranteeing them. So like I said, you don't have to choose one or the other, you can often choose both. And again, if the aim, if the purpose of the guarantor is to give the landlord options, then why not explore all those options?
[00:24:16] Speaker A: Yeah, 100%. Now what has become more of a new trend, and I don't think it's going to be a trend, I think it's going to be around for a long time, is professional guarantors becoming way more popular to completely declare. We obviously have launched a product ourselves to cater for this, which has actually been our most popular product launch we've ever had in terms of how well it's been received.
Can you talk us though, Ryan, how does a professional guarantor work differently to a personal guarantor and what I guess legal advantages or disadvantages that it might bring.
[00:24:52] Speaker B: You outlined earlier some disadvantages of guarantors. The guarantor might die, they might leave the country, all these things can happen. Now it's possible for a professional guarantor to go bankrupt, they might cease trading, you might not be able to get paid, but generally that they're perhaps a safer bet than a personal guarantor.
And so just to explain all this, there are companies out there, letting sub included, who basically offer to stand in for a tenant if they either can't provide a guarantor who can pass referencing or won't provide one.
But so long as they are given that, that choice between providing a guarantor who can pass referencing or taking out this professional guarantor policy, then that's all perfectly compliant above board as far as I'm concerned and I completely echo what you're saying. I think if anything's going to come from this, the rise of guarantors will come with the rise of professional guarantors as landlords are seeking to ease their anxiety about letting in this, in this new era.
[00:26:02] Speaker A: Yeah, and actually one of the reasons I, I actually love this product is because landlords, tenants and agents love it because for a tenant it allows them to move into the home that they really want and otherwise they wouldn't be able to do it because they either haven't got a guarantor or they actually don't want to put, you know, necessarily the request in to a family member due to a whole range of circumstances. For landlords and agents, it gives them a solution to a fall through not happening and also gives them protection. So it's that, it's that type of product that's actually completely opposite to referencing. When we Reference the tenant. All the good tenants feel that they absolutely should pass. And so you never get a thanks for that. It's just, it's a kind of, it's a, it's a job done. If you, if you decline a tenant, they're aggrieved by that because they also think they should pass. So it's kind of a product that is, you know, there's never really much happy news that comes out of referencing on a professional guarantor policy. It's completely the opposite because actually you can really change, change things for people. And to your point on obviously the company going bankrupt, which I guess people might consider as a risk, I think that, that, that's true, but for us and for other providers out there, that's why it's insured, so that if that ever happened, the landlord and the agent would be completely protected to make sure that there wouldn't be a, there wouldn't be an issue. And I do think, again, would you agree with the legislation changing that the need for this product is going to be even higher when advance rent goes. You know, we talked about students, but we see all the time, you know, people coming into the uk, they can't get a UK guarantor. We don't allow them to proceed if they had a guarantor overseas because again, you know, exactly to your point, we can't pursue them if something goes wrong.
[00:27:59] Speaker B: Yeah, so you're quite right.
There's currently a sector of the renting population who can rent because of the ability to pay advance rent that will not be able to rent when Renters Rights act becomes law. And that seems insane to me that I think the banner of answer is perhaps one of the worst and hastily and least considered aspects of the legislation. Because I think a lot of people were brought, if not on board, at least kind of understanding the logic perhaps of removing Section 21s to give say, tenants more security, the introducing pet rules, which when there currently aren't really any pet rules. So I, I think people can understand that even if they don't agree with it. But a balance, advanced rent just seems to isolate a whole section of, of the, of, of the rental community and it will push them either into this, even into these, these kind of professional guarantors as being like the only way they can really rent a property or it will push them straight into the, into the arms of unregulated and illegal landlords who simply will take advance rent. There will be landlords out there who will break the law and they will take the Advanced rent. And they'll say, thank you very much, here's a place to stay. And, and it's because the government has decided that the people who, who kind of fit into this, this, this no man's land of they have money, but not necessarily stable income, approval income, that landlords will be willing to take a bet on them. And again, if all these algorithms are out there saying no, don't let this person, then all these industries that kind of rely on what the algorithm says, which are letting agents and insurance companies and Falander can't get rent indemnity insurance.
A professional guarantor is almost like rent indemnity insurance, but it's like supply side. So rather than landlord paying the premium for it, the tenant will pay for essentially insurance products to be taken out which will cover X amount of rent depending on who the provider is. That's basically how they all operate.
And that will be a way for these people to access lettings. Right. Well, I'll have to word this or say this very carefully because it is quite technical and pedantic, but it basically boils down to how the Tenant Fees act operates. So the Tenant Fees act works by banning any prohibited requirements. And a prohibited requirement is one that is not permitted. Now, usually when we talk about the Tenant Fees act, we're talking about fees, we're talking about money changing hands. So there is a whole list of permitted fees within the Tenant Fees Act. So you have, for example, rent and deposit holding. Deposit people are familiar with this stuff because it's not exactly new.
What you don't have in the Senate Fees act is any mention of the word guarantor. I touched on this earlier. That legislation doesn't tend to regulate guarantors particularly closely. So a prohibited requirement is one that is not permitted is requiring a guarantor. And by guarantee, I am talking about like flesh and blood in England and Wales, they'll pass referencing that kind of guarantor is requiring that restricted end of a Tenant Fees Act. It isn't. So is having an alternative, a paid alternative to that permitted under the Tenant Fees Act? Well, this is where we get pedantic.
So the guidance from the Tenant Fees act, it uses the words it has to be something that is permitted by the Tenant Fees Act. Now and if I go back to what I said earlier about what is actually in the Tenant Fees act, guarantors aren't permitted under the Tenant Fees Act. That's not to say that they are prohibited, that's just to say they are not in a little list to Say this is okay because the only list that arises in the Tenant Visa act which says that things are okay is only to do with fees. Obviously guarantor agreements are fees. So the legislation says that it's. That it's basically okay as long as it's an alternative to something which is not prohibited. So because a flesh and blood guarantor or requiring a flesh and blood guarantor is not prohibited, you can have an alternative to that which is these guarantor alternative products.
[00:32:16] Speaker A: And I'm not a solicitor and I'm not into the detail like you, Ryan, but I liken it a little bit like a deposit versus a deposit replacement product. As long as the tenant has a choice in terms of which way they want to proceed, either is fine.
If a landlord is accepting of that situation. I see guarantors, professional guarantors, quite similar. You know, the tenant has to have a choice. I don't think we should ever make a tenant have a professional guarantor over a personal guarantor, but I think actually provides the landlord and the agent with more protection. And if the tenant would rather have one, I think they should be allowed to.
[00:32:54] Speaker B: Yeah. Deposit alternatives are the analogy because they were expressly blessed by the Tenant Fees act guidance. Deposit alternatives are held up as an example where you can either require a permitted payment, the cash deposit, or you can take an alternative. So you can't insist that someone just pays for the product, but as long as that keyword choice, as long as they have that choice and it's okay now. Well, if we're going to, if I'm playing devil's advocate here slightly, what if someone can't provide a UK guarantor? Yeah, that flash of blood guarantor I was talking about. And let's say they're a foreign student, what then? Well, to that I would say if we look at the deposit analogy, some people can't provide deposits, some people are unable to raise those funds. It's not at all uncommon for tenants deposits to be locked up in their previous tenancy.
Yeah.
Long after they've moved into a new property. So there's always kind of this, this disconnect between of cash flow with these deposits. So it's totally possible that someone will not be able to provide the thing that you're asking them for. Does that make it prohibited? I don't think it does, but I could definitely see a court in the future, maybe taking a view on whether or not if you're asking a Chinese student, for example, to provide a UK guarantor Is that different perhaps to asking a tenant to provide, say, £1,000 deposit? Is it easier to get £1,000 together than is to magic up a flesh and blood guarantor in this country? I'd say it probably is easier. This is one for the courts to worry about in a few years time, I'd say. But it's on my mind. But as things stand, I don't think there's any issue at all with the Tenant Fees act and how it interacts with guarantor alternative products.
[00:34:42] Speaker A: Excellent. Now, I wonder how many times we've said the word guarantor in the session today. I'm not sure. Is there any.
[00:34:47] Speaker B: Hell of a drinking game, wouldn't it?
[00:34:49] Speaker A: Yeah, it would be. Yeah. I kind of feel I want to listen back and count now, but is there any kind of final word or anything else that you kind of want to tell our listeners or ask our listeners to consider on Gavin Tours? Ryan, before we wrap up?
[00:35:02] Speaker B: Well, I'll tell you what I'm going to do is, is I have put together some wording to set up my position on guarantor or alternative products, because obviously I've just been saying it and saying it isn't quite the same as pulling out specific bits of legislation that support my position. So what I'd like to try and do is if I can give you that wording, then you can distribute it as a note so you can actually see the methodology I've gone through to support that position.
[00:35:32] Speaker A: Brilliant. Absolutely. And when we post anything about the podcast, we'll include it. We'll make sure it's up on Knowledge Hub and everything else for our agents and obviously for any of our listeners, they'll be able to pick it up off LinkedIn. Ryan, thank you so much once again for coming and giving so much useful insight and talking about really specifically about a topic that again, probably people haven't given even half an hour to talk about guarantor, so hopefully it's provided them with that. Now, to ensure our listeners never miss an episode of let's Talk, let's please follow us on Spotify or wherever you listen to your podcast and please leave us a review. Thank you all very much for listening. Let's Talk let's an original podcast from the Lettings Hub.
