Housing Hand has reported seeing a 50% increase in rental guarantor applications over the past six months.
The company is also signing up accommodation partners at a rate of 200 per quarter.
Rising rents, along with the generally tougher economic climate, mean that more people need rent guarantors to secure the accommodation they want.
However, it has been found that more people are failing the checks required to serve as a guarantor.
“Many people associate needing a guarantor with students, who have little or no credit history, but that’s certainly not the case these days. Many working professionals now have to provide a guarantor to secure their tenancies and many of them are turning to professional guarantor services to facilitate this. The result has been a rapid increase in applications for guarantors. The rental sector’s unfortunate storm needs solutions, which we are embracing in collaboration with our ever-expanding partner network. Tenants also need a speedy service, so we have enhanced our tech to be able to scale with demand.”Graham Hayward, Chief Operating Officer, Housing Hand
Housing Hand reports that the rate of those passing the relevant checks has dropped to somewhere around 25%.
This is leading to an increase in referencing firms seeking out additional assurance, resulting in even higher demand for rental guarantor services.
Interest rate increases and the ongoing decrease of landlords from the private rented sector mean that rent increases have affected the UK rental market.
“With demand continuing to outstrip supply, and increased interest rates and inflation impacting many private landlords, the Housing Hand team is working ever more closely with our purpose-built student accommodation providers and Build to Rent partners, whose co-living model can offer real value to renters. Using a guarantor company means these businesses can reduce the cost of onboarding new tenants and remove the risks associated with tenants defaulting and the administrative burden of recovering unpaid rent.”James Maguire, Head of Sales and Business Development, Housing Hand
Home reports that rents across the UK have risen by 11.4% in the past year, while Foxtons report a rise of 13% year-on-year in London (led by East London, which has seen an 18% increase in rents since May 2022).
Zoopla reports that 11% of the homes for sale on its site are former rental properties, as the mass exit from the private rented sector continues.
In the majority of regions, Zoopla’s data shows that the number of homes for rent is somewhere between 20% and 40% below pre-pandemic levels.
Last year, Housing Hand found that many students struggled to find accommodation amidst the problematic sector-wide supply/demand imbalance.