A recent study reveals a notable surge in high-salary renters being required to provide guarantors – a shift in the rental market dynamics that property investors should be aware of.

The research, undertaken by Goodlord, scrutinised 783,000 tenant applications from January to September over four consecutive years (2020 to 2023).

Out of these, 138,949 tenants were asked to provide a guarantor. This analysis highlights an evolving pattern, particularly post-COVID, where the practice of requesting guarantors has not only persisted but expanded beyond traditional groups.

Key Findings from the Study

In 2020, 17.7 per cent of tenants were asked for a guarantor, which marginally rose to 18.4 per cent in 2023.

While guarantor requests for no-income tenants (usually students) remained stable, a remarkable increase is seen in higher income brackets.

Tenants earning £50,000-£74,999 experienced an 82.3 per cent hike in guarantor requests from 2020 to 2023.

For those earning between £75,000 and £99,999, the likelihood of being asked for a guarantor soared by 187 per cent in the same period.

Young renters under 30, forming over half of the renting population, are now eight per cent more likely to be asked for a guarantor, indicating a shift in landlord confidence regarding their ability to meet rental payments.

Contrastingly, requests for guarantors among renters over 60 declined by 10 per cent from 2020 to 2023.

Considerations for property investors

As property investors, it’s essential to understand these market trends and adapt your rental strategies accordingly.

The increasing guarantor requests for higher earners may indicate a more cautious approach to renting, despite tenants meeting affordability criteria.

For those advising or managing properties, it’s critical to balance the need for financial security with reasonable tenant requirements.

Staying informed about these evolving market dynamics will aid in making informed decisions and maintaining a successful investment portfolio in the property market.

If you require advice on managing the finances of your property portfolio, please speak to our team today.