Landlords are becoming more risk-averse when choosing tenants ahead of a likely Section 21 evictions ban.
New research from Goodlord reveals that the share of those insisting tenants pay two or more months’ rent upfront has risen by 43% since the pandemic; so far this year, one in 40 landlords have made the demand.
Many have been scarred by the evictions ban and courts backlog and are now wary of taking tenants who aren’t financially secure – bolstered by increased tenant demand for fewer available rental properties.
Goodlord analysed 730,000 tenancies over the last four years and also found a 36% rise in the number of non-student tenants being asked to provide a guarantor, with the biggest jump seen in 2020.
Guarantor hotspots
The biggest increase was in the West Midlands, where 14.9% of non-student tenants were asked to provide a guarantor, up from 6%. During the same period, requests for guarantors for student tenants have remained relatively stable.
Goodlord says as more tenants are spending a greater proportion of their salaries on rent and stretching their budgets in order to secure properties with spare rooms or gardens, landlords want additional assurances during the referencing process.
“Not only have tenants faced financial difficulties, but it’s important to remember that many landlords will have as well – considering that 54% of landlords have buy-to-let mortgages and nearly half of all landlords have only one property,” says Nathan Emerson, CEO of trade body Propertymark (pictured).
“Even before the pandemic, changing legislation and the onset of tax changes have impacted landlords’ costs, so it’s not surprising that we are seeing a rise in landlords requesting rental guarantors to give a greater level of protection should a tenant fall into arrears or default on the tenancy agreement.”
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