An hugely increased number of tenants on salaries of £25,000 per year or above are being asked to provide a guarantor to secure a rental property. This is as lack of supply and inflationary pressures push up average rental prices and landlords seek out additional assurances from tenants.
Goodlord analysed more than 220,000 tenancies taken out between January 2020 and June 2023. Our data reveals a steady increase in requests for renters who earn between £25,000 and £74,999 to provide a guarantor.
The average salary for a full-time employee in Britain in 2022 was £33,000. In 2020, it was £31,461. In 2020, just 3.7% of tenants earning salaries of between £25,000 and £49,999 were asked to provide a guarantor by their letting agents or landlord. However, in 2023 to date, this has risen to an average of 5.84% of all tenants - an increase of 58% compared to 2020 figures.
This means requests for guarantors are now far higher than even at the peak of the pandemic, when hundreds of thousands of renters were placed on furlough or faced an increased chance of redundancy.
With landlords facing new pressures, including rising interest rates pushing up mortgage costs, many are seeking out the security of a guarantor when agreeing new tenancies. This acts as an extra layer of insurance against unforeseen circumstances, such as a tenant losing their job and being unable to pay rent.
Perhaps more surprisingly, there has also been an increase recorded in the number of tenants earning between £50,000 and £74,999 each year being asked to provide guarantors, despite salaries in this range being far higher than national averages.
In 2020, just 1.35% of earners in this bracket were required to secure their tenancy with a guarantor. In 2021, this rose to 1.41%, before rising again in 2022 to 1.92%.
However, in 2023 to date, the average number of tenants commanding salaries of £50,000 to £74,999 being asked to provide a guarantor is 2.59%. Despite still being a very small percentage of renters in this income bracket, this represents a 92% increase on 2020 levels.