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Advice for Edinburgh tenants: guarantors and advance payments

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January 13, 2020 No Comments

Advice for Edinburgh tenants: guarantors and advance payments


Posted by Daniel Denisiuk in Blog

How to rent a property in Scotland if you are a full-time student

Private rental sector in Scotland has its own rules, some of which are enforced by mortgage lenders, some stem from the guidelines of leading professional bodies (ARLA/Propertymark, The Property Ombudsman) or Scottish government legislation (for example Private Rental Tenancy Agreement, introduced in November 2017). The general rule is that any applicant should be financially viable and able to afford the property. The usual annual income threshold is 30 times the rent. For example – if the advertised rent is £700 pm, the applicant should document the gross annual income of at least £21,000.

What about students who do not have any professional income? Most Edinburgh letting agents accept student loans and bursaries – and in case of joint tenancies it is the combined income of all applicants that counts. Unfortunately, not all applicants are able to document sufficient income. What are their options then?

Advance payment

Most letting agents and private landlords would not say no to a payment in advance, i.e. in a lump sum paid before of the move-in date. Scottish Government Model Private Residential Tenancy agreement limits the maximum amount of rent which can be paid in advance to 6 months’ rent. So, using the previous example, if the rent is £700, letting agents and landlords can ask for £4,200 advance payment. As tenants can now move out giving 28 days’ notice without any reason, what happens to the rent paid in advance if, for example, they decide to move out after 4 months? Luckily the rent paid in advance is still their money. All registered letting agents in Scotland should transfer lump payments to a ring-fenced and insured client account. If the tenant moves out before 6 months, the remainder of the funds will be returned on a pro-rata basis.

Guarantors

What if payment of 6 months in advance is not an option? Most letting agents and landlords accept UK-based guarantors, but the referencing criteria are stricter. The income threshold for the guarantor is usually set at 36 times the monthly rent. Using our previous example – if the rent is £700 per month, then the guarantor would need to document an annual gross income of at least £25,200.

Very few, if any, Scottish letting agents accept non-UK resident guarantors as it is very difficult and costly to claim money off a person living abroad. Our advice to foreign students looking for a private rental accommodation in Edinburgh is – check if your education provider would be willing to act as a guarantor. The University of Edinburgh runs a Rent Guarantor Scheme open mostly to overseas students. Edinburgh Letting Centre (and many other local letting agents) accept universities and colleges as guarantors. The best place to ask if your university can act as your guarantor is a student association/union or its department dealing with student accommodation.

There are some private insurance companies on the market willing to act as guarantors for students and young professionals – obviously for a fee. Housing Hand’s prices, for example, start at £295. They do require a co-signer – but they accept both UK and non-UK bases co-signers.


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