Tenant wants to remove Gaurantor
Dear RLA/RLA forum,
I have a tenant that is just over 6 months into a standard ASTA with me. He failed referencing because he had recently changed his employment status from being an employee to becoming self employed for less than 12 months at the time of signing the tenancy. I insisted on there being a home-owning guarantor to support the tenancy and I would have requested this even if he had passed referencing due to my own previous experiences.
He has now come to me with a request to remove the guarantor from his obligations as his guarantor wants to get a mortgage and has been advised to do this by his FA. I have had a very easy relationship with the tenant so far and am disappointed the tenant has indicated he intends to move out this year. I do have some sympathy for his request to remove the guarantor but this does raise some interesting questions and how to do it and it could expose me to risk.
To release the guarantor I would need to either have the tenant re-referenced and pass (he may pass now as he would have recently filed a return online) or would need a replacement guarantor.
I have a rent guarantee policy covering this ASTA which insists on either the lead tenant or their guarantor passing referencing. I have yet to check with the insurance company if we remove the current guarantor but replace him with another that does pass referencing (either tenant or another guarantor) what effect this will have on the rent guarantee policy, eg would the policy be able to continue or would it become void and I need to start and pay for a new policy?
As well as signing a guarantor liability form downloaded from RLA, the guarantor is named on the ASTA and has signed somewhere on the document as well as initialled every page.
- What are your thoughts/advice on the rent guarantee policy
- Do I have to sign an entirely new tenancy agreement with the tenant if I want to remove the guarantor from his liability or is there a form we could complete as an addendum to the tenancy agreement that would nullify his obligations?
- What charges should reasonably be borne by the tenant:
a. Should I charge any admin time above cost price to the following five and if so what would be reasonable?
i. Paying for a new rent guarantee policy?
ii. Paying for referencing himself or another guarantor?
iii. Paying for reinsuring deposit?
iv. Admin time to draw up a new tenancy agreement
v. Admin time and cost to protect a new ASTA if needed
NB The tenant has already cost me more than expected with an agreed rental discount and then increased estate agent fees after he viewed with one estate agent and then agreed the property with another. Both ended up charging me fees.
- Would you advice in future I not have the guarantor named on the tenancy agreement and initial every page so I can change this more easily and am I any less protected if I do this
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