The rent guarantor contracts used by thousands of tenants in England and Scotland are facing uncertainty as the Ministry of Housing, Communities and Local Government (MHCLG) issues updated guidance. From 1 May 2025, the Renters' Rights Act brought significant changes to the rental market, leaving many existing agreements potentially affected.
The MHCLG has clarified that tenants must be given a choice when selecting a professional guarantor service – a 'prohibited payment' if they are forced to use a specific provider. This is a major shift from previous practices where letting agents often recommended or specified a single guarantor company.
Guarantors who entered into agreements before 1 May 2026 are being advised to review their contracts and seek the landlord's consent for any necessary changes. The government has not yet provided details on what these changes might entail, leaving many in the property sector waiting for further clarification.
The move adds complexity to an already challenging rental market. Research suggests that nearly half of tenants require a guarantor when starting a new tenancy – often first-time buyers struggling with high house prices and mortgage rates. Average asking rents outside London reached a record £1,278 per month in May 2026, further squeezing affordability.
Property professionals are facing potential compliance issues, particularly for pre-May 2025 tenancies that include guarantor agreements. Bruce Evans, Chief Commercial Officer at RentGuarantor, warned agencies may be in breach of the Act if they fail to offer tenants a choice of providers – including situations where agents recommend a sole provider or decline a tenant's chosen provider.