"This practice will undoubtedly be frustrating for tenants who easily meet affordability checks. However, landlords have faced four years of intense uncertainty and complex regulatory changes; their desire to seek out additional assurances isn’t illogical"
- Oli Sherlock - Goodlord
An analysis of over 780,000 tenants who rented property between 2020 and 2023 has revealed a significant increase in renters on high salaries being asked to provide guarantors.
The study, conducted by Goodlord looked at 783,000 tenants who submitted a tenancy application January-September in 2020, 2021, 2022 and 2023 (to provide four comparable time periods). Of these 783,000 tenants, 138,949 were asked to provide a guarantor.
Covid surge set ‘new normal’ for renters
The data shows a rise in guarantor requests during 2020, likely driven by the market uncertainties created by Covid. However, instead of dissipating following the peak of the pandemic, guarantor request rates have stayed high - indicating that a ‘new normal’ was established in 2020.
Since then, the overall rates of guarantor requests have been fairly steady. 17.7% of all tenants were asked to provide a guarantor in 2020 compared to 18.4% in 2023; a modest increase of just under 4%. However, when this data is broken down into salary brackets and age, a new picture begins to emerge.
Dramatic rise in high earners asked to provide guarantor
For tenants with no income (a renting demographic typically made up of students - the group most associated with the need for guarantors), the number of guarantor requests has been broadly stable since 2020.
However, for all other income groups, there has been a significant increase in guarantor requests when you compare figures from 2020 with those from 2023, with the biggest percentage shifts seen at the higher income levels.
Tenants earning between £50,000-£74,999, for example, are 82.3% more likely to have been asked to provide a guarantor in 2023 compared to 2020. In 2020, 1.47% of this group were asked to provide a guarantor, rising to 2.68% by 2023.
For those earning £75,000-£99,999, the shift is even more stark. Renters in this salary bracket are 187% more likely to have been asked to provide a guarantor in 2023 compared to 2020. Back in 2020, just 0.6% of this age were asked to provide a guarantor, but this had risen to 1.72% by 2023.
Younger renters on higher salaries are most affected
The data also shows that younger tenants are most likely to have been affected by this increase in guarantor requests.
Renters who are under 30 - who make up over 55% of the renting population - are nearly 8% more likely to be asked to provide a guarantor today compared to 2020, even if they are a high earner. This may indicate that landlords and letting agents have lost confidence in the viability of young tenants to make their rental payments, regardless of their current financial position.
The picture is different for the over-60s. Whilst only making up less than 3% of the renting population, this age group saw a 10% decrease in requests for guarantors - dropping from 8.93% in 2020 to 8.01% in 2023.
Oli Sherlock, Managing Director of Insurance at Goodlord, comments: “Asking for a guarantor used to be very concentrated amongst student tenants and those who, on paper, looked like they may be renting outside of their means.
"The pandemic widened this net and asking a broader demographic of tenants for additional assurances became embedded for many landlords and agents. As this analysis shows, the practice has trickled out beyond the ‘traditional’ groups, meaning higher earners are increasingly likely to find themselves providing guarantor details.
“This practice will undoubtedly be frustrating for tenants who easily meet affordability checks. However, landlords have faced four years of intense uncertainty and complex regulatory changes; their desire to seek out additional assurances isn’t illogical.
"A sensibly utilised system of guarantors is a vital feature of any healthy rental market, but agents should caution against excess or unnecessary use of the practice.”
