Rental guarantor service Housing Hand is experiencing a significant surge in demand amid escalating challenges for the nation’s private landlords and tenants in 2023.
Over the past six months, applications for rental guarantor services have seen a sharp 50% increase.
The company is also bringing on board 200 new accommodation partners per quarter, indicating a strong growth trajectory.
Despite its size and decade-long presence in the UK and Irish markets, the current growth spurt mirrors that usually seen in smaller start-ups.
This can be attributed to the tough economic climate and climbing rents, causing more tenants to seek rent guarantors to secure their desired accommodations.
However, as more individuals fail the checks necessary to serve as a guarantor – currently, only about 25% pass – referencing companies are seeking additional assurances, driving further demand for rental guarantor services.
Graham Hayward, chief operating officer at Housing Hand, said: “Many people assume needing a guarantor is exclusive to students with little or no credit history.
“However, in today’s market, working professionals are increasingly required to provide a guarantor to secure their tenancies, leading to a surge in applications for guarantors.
“We have embraced this challenge in collaboration with our rapidly expanding partner network while improving our technology to scale with demand.”
Interest rate hikes and the ongoing withdrawal of landlords from the private rental sector are pushing UK rents upwards.
Home reports indicate an 11.4% rise in rents across the UK over the past year, with Foxtons noting a 13% increase in London, led by an 18% rise in East London since May 2022.
The relentless rise in interest rates has been the breaking point for many landlords after years of diminishing profitability from private tenancies.
Zoopla reports that 11% of homes currently for sale were formerly rental properties, indicating a mass exodus from the private rental sector. In most regions, the number of homes for rent is now 20-40% below pre-pandemic levels.
James Maguire, head of sales and business development at Housing Hand, added: “As demand continues to exceed supply and with rising interest rates and inflation affecting many private landlords, we are working closely with our student accommodation providers and Build to Rent partners.
“Using a guarantor company, these businesses can reduce the cost of onboarding new tenants, and mitigate the risks associated with tenant defaults and the administrative burden of recovering unpaid rent.”
