Higher earners increasingly asked to provide guarantors amid inflationary pressures – Goodlord
Tenants on salaries of £25,000 per year or above, seen as higher earners, have increasingly been asked to provide guarantors to secure a rental property, due to supply issues and inflation, according to research by Goodlord.
The rental technology business analysed more than 220,000 tenancies between January 2020 and June 2023, revealing an increase in guarantor requests for those earning between £25,000 and £74,999.
In 2020, just 3.7% of these tenants were asked to provide guarantors by their letting agents or landlord; however, in 2023 this rose to an average of 5.84% of all tenants – an increase of 58% compared to 2020 figures.
This figure was higher than at the peak of the pandemic, despite widespread furlough and threats of redundancy.
There was also an increase for those in the higher half of this bracket, earning between £50,000 and £74,999, from 1.35% in 2020 to 1.92% in 2022, and even further to 2.59% this year.
The average cost of a rental property in England was found to be £1,099 per property per month in 2023, rising to £1,871 in London.
This was up from an average price of £937 in 2020, or £1,612 in London.
Oli Sherlock, director of insurance at Goodlord, said: “The rental market is facing a series of overlapping challenges. We’ve spent years not building enough homes, meaning the supply of rental stock is low.
“This is being compounded by landlords – who are facing rising costs and ever more complex regulation – selling up and leaving the market.
“This supply and demand problem means rents are rising at a time when tenants have less disposable income thanks to the cost of living crisis.
“This means more tenants are being asked to show they have the support in place to meet their rental obligations, should they need it.
“As well as a rise in the number of tenants who find themselves needing to provide a guarantor, we’ve also seen a big increase in landlords taking out rental insurance.
“It’s a far from ideal situation for either tenants or landlords.
“The Government should see this as an additional sign that more support for the rental market is urgently needed.”