Renters’ Rights Bill

Baroness Kennedy of Cradley Excerpts

Monday 7th July 2025 Lords Chamber

Moved by

[Baroness Kennedy of Cradley]

61: After Clause 20, insert the following new Clause—
“Restriction on landlord’s ability to require tenant to provide guarantor(1) A relevant person must not, in any of the circumstances set out in subsection (3), require a person, as a condition of the grant of a relevant tenancy, to provide a guarantor in relation to the observance or performance of the tenant’s obligations under the tenancy.(2) For the purposes of this section, requiring a person to provide a guarantor includes accepting an offer by that person to provide a guarantor.(3) The circumstances are—(a) that the person has paid a tenancy deposit or has been assisted under a deposit scheme,(b) that the person is required to pay rent in advance of one month’s rent or more,(c) that on a reasonable assessment of their means the person’s income (including state benefits received and any other lawful source of income) is sufficient to enable them to pay the full rent due under the tenancy,(d) that arrangements will be made for housing benefit or the housing element of universal credit to be paid directly in respect of rent to a relevant person,(e) that the relevant person has entered into a contract of insurance under which they are insured against non-payment of rent, or(f) such other circumstances as may be prescribed by the Secretary of State.(4) In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee may not exceed a sum equal to six months’ rent.(5) In any case where a relevant person lawfully requires a person, as a condition of the grant of a relevant joint tenancy, to provide a guarantor, the sum claimed under the guarantee may not exceed such proportion of the loss as is attributable to the act or default of the individual tenant on whose behalf the guarantee was given; and if such proportion cannot be proved, may not exceed the sum obtained by dividing the total loss by the number of tenants.(6) In this section—“guarantor” is a person who enters into a guarantee in relation to a relevant tenancy; a “guarantee” is a contractual promise to be responsible for the performance of an obligation owed by the tenant to a relevant person under the tenancy if the tenant fails to perform the obligation;“deposit scheme” includes a scheme whereby a sum payable by way of deposit or a bond or guarantee is provided by a local authority, registered charity or voluntary organisation for the purpose of providing security to a landlord for the performance of a tenant’s obligations under a tenancy;“tenancy deposit” has the same meaning as in section 212(8) of the Housing Act 2004;“relevant person” has the meaning given by section 16M(1) of the 1988 Act.”Member's explanatory statement
This new clause would restrict the circumstances in which a landlord can request a guarantor.

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[Baroness Kennedy of Cradley (Lab)]

My Lords, I declare my interest as a trustee of the Nationwide Foundation. Amendment 61 seeks to address a growing and deeply concerning issue in the private rented sector: the overuse, and often misuse, of guarantor requests. This amendment was expertly moved by my noble friend Lady Lister of Burtersett in Committee, and I thank her for her support today along with that of the noble Baroness, Lady Grender, and the right reverend Prelate the Bishop of Manchester—all of whom have given continued support to addressing the issue of the overuse of guarantors.

I am sure that noble Lords across the House will accept that landlords should retain ways to manage financial risk. However, the increasing use of guarantor requests is creating a new form of exclusion, particularly for vulnerable renters. This is what Amendment 61 is about: it is not about banning guarantors altogether but restoring proportionality and fairness in their use.

Guarantors have become a significant barrier to housing for many. Recent data from Generation Rent shows that almost 30% of renters who moved in 2023-24 were asked to provide a guarantor. A further survey by Shelter and YouGov showed that over 100,000 private renters per year are blocked from renting a home in the private rented sector due to a guarantor request they cannot fulfil.

Meanwhile, only 2.9% of landlords attempted to claim unpaid rent from a guarantor in the last two years, despite an estimated 1.85 million tenants being asked to provide one. Guarantors are therefore becoming commonplace, yet they are rarely needed in practice and often never pursued when payment issues arise. Noble Lords may be asking why. A YouGov survey by Shelter asked the same question. When questioned, 25% of private rental landlords said that they asked for a guarantor because “My letting agent advised me to”. Another 16% said, “I thought it was standard practice”, while 12% said, “I’d heard from other landlords it was a good idea”. Simply put, guarantors are over-requested, largely unused and, worst of all, increasingly serve as a proxy for discrimination.

When a tenant can show that they can afford the rent through a standard affordability assessment, the additional requirement of a guarantor becomes both unnecessary and unfair. It many cases, it adds to an already substantial financial burden, alongside the five-week deposit and the first month’s rent in advance. The evidence shows that this practice disproportionately affects people on lower incomes, those without access to financial support networks and groups already at greater risk of housing discrimination: women, single parents, renters with disabilities and black and Bangladeshi households are all significantly more likely to be asked for a guarantor. A renter with a disability is 20 % more likely to face such a request, and a black renter is 66% more likely. These figures cannot be anomalies; they are a pattern. In Committee, we heard from my noble friend Lady Lister of Burtersett about older renters securing their pensions, being asked intrusive questions and then being required to provide a guarantor. From the noble Baroness, Lady Grender, we heard of a self-employed single mother being asked for a guarantor even though she was earning £45,000 a year—well above the UK median income. Too many renters simply do not have someone in their network who can act as a guarantor. Unless this issue is addressed, we risk entrenching a two-tier system in the rental market: one for those with access to wealth and another for those without.

The justification for these requirements often rests on an overstated fear of rent arrears, yet government figures show that only 2% of private renters were in arrears in 2023-24, and the English Housing Survey puts it at 5%. Of course, that is not negligible, but it does not warrant such widespread and disproportionate use of guarantors. There is an eviction ground for rent arrears, which is the primary backstop for when tenants fail to pay their rent.

Moreover, Amendment 61 aligns with the National Residential Landlords Association’s own guidance that guarantors should be requested only when a tenant cannot fully demonstrate that they can afford the rent. This amendment strikes a balance, allowing landlords to use guarantors when genuinely necessary, while protecting tenants from unjust exclusion. It is supported by a wide range of voices: Shelter, Independent Age, UNISON, Renters’ Reform Coalition, the Mayor of London and others. It is also worth noting that this amendment not only calls for legislative clarity but invites the Government to go a little further by introducing national guidance on fair and proportionate tenant referencing. Such a move would help standardise best practice and prevent local variation from undermining equality in the rental market.

In summary, this amendment is proportionate and reasonable and would not remove a landlord’s right to safeguard their interest, but it would ensure the right is exercised in a way that is just, consistent and in keeping with the spirit of the Bill. I hope that my noble friend Lady Taylor of Stevenage is minded to accept this amendment, but if that is not the case, I ask my noble friend four final critical questions. With guarantor requests increasingly becoming standard process, rather than when they are needed, will the Government issue guidance to landlords on when to request a guarantor? Will the Government look at what support they can provide for people who are at risk of homelessness because they cannot find a guarantor? Will the issue of guarantors be examined in detail as part of the post-Bill implementation work? Will my noble friend commit to working on these issues with Shelter, the Renters’ Reform Coalition, noble Lords in this House and many others on these issues, to find other ways to support the growing number of renters being locked out of the PRS because of the overuse of guarantors?

Without this amendment or government action to address the issue of guarantors, the Bill’s measures to tackle discrimination risk being undermined by the very practices it seeks to reform. I beg to move.

[Lord Fuller (Con)]

My Lords, I will speak briefly against Amendment 61. It is well-meaning, but I am afraid it is a blunt instrument full of unintended consequences. I do not deny that to require a guarantor for most tenancies is disproportionate and unnecessary, and the Bill makes welcome provisions to regularise what has become standard practice for the most part. However, I want to alert your Lordships’ House to some perverse consequences for three particular types of potential tenant who are among the quietest voices: the foreign student; the groups of students; and those with impaired reputation or difficult personal circumstances. Guarantees make the unrentable into rentable, in some cases. It makes opportunities exist when refusal would otherwise be the only other choice.

Let us dwell for a moment on the case of the foreign student. The foreign students come from far away; they have no reputation, there is no covenant strength and they may not even have arrived in the United Kingdom. They certainly do not have a UK bank account at this point and they probably do not have a UK mobile phone either. In many cases, the only way in which they can secure a property to live in before they arrive is to have the support of a guarantor; a guarantor allows them to have a roof over their head.

Then we have the groups of students. I refer to the case of my daughter, when she went off to Newcastle. There were seven students who were friends, although none of them really knew each other that well; they certainly were not related to each other, and there were no family bonds to tie them, whereas the Bill contemplates that the tenant is a single tenant. It is quite reasonable for a landlord renting to students, if they cannot have payment in advance—I will not talk about that because we discussed that on day one of Committee—to require some sort of guarantor so that the downside risks can be compensated. Not all students want to live in expensive halls of residence; they are disadvantaged at an early part of their lives.

Let us think also about those with an impaired reputation—people who may have left prison or are suffering from domestic abuse or family breakdown. I have been a guarantor for hundreds of families in these sorts of situations, but the Government seek to make my well-meaning interventions unlawful. Let me explain. Sitting in your Lordships’ House, I see the Minister and my noble friend Lord Jamieson who, like me, have been leaders of councils. We know that councils, in certain circumstances, have to step in to avoid homelessness. We know there are not enough registered social landlords and that the private sector landlords are our friends—they are part of the solution, not the problem. However, we cannot expect the private sector landlord to be the only one who takes a chance to get that person, who may have become homeless, a roof over their head.

In common with many other councils, my council—and I am proud that we pushed this hard—went for guarantees. We stood as guarantor for somebody in difficult circumstances so that the private sector landlord, who was prepared to take a chance with us, could provide a home. This is an essential part of managing a housing market. It is all about supporting the most vulnerable. It works; it is a success. If you have been a council leader—I am sorry that I failed to identify the noble Baroness, Lady Scott, who has also been a council leader in these circumstances—this is about helping families get back on their feet.

In considering Amendment 61, I ask noble Lords: in what universe can this misdirected, misguided and counterproductive amendment help those with the quietest voices get a roof over their heads? Providing a guarantor is the way in which the unrentable can rent, and there is nothing fair about keeping people in bed and breakfasts if they could, via a guarantor, be housed. I cannot support this amendment.

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There is a supply and demand imbalance in this country, which the Government are seeking to tackle through our ambitious milestone of building 1.5 million safe and decent homes over this Parliament. However, while we are in this situation where there is such strong competition for privately rented housing in some parts of the country, I do not think it would be helpful to support a measure which would risk doing more harm than good to renters seeking to access the private rented sector. I hope that on that basis, my noble friend will consider not pressing her new clause to a vote.

[Baroness Kennedy of Cradley (Lab)]

My Lords, I thank every noble Lord who has spoken on this group. I reassure my noble friend Lady Taylor of Stevenage and the noble Lords, Lord Fuller and Lord Jamieson, that the intention behind this amendment is clear: it is not about banning guarantors. On this side of the House—and, I am sure, on all sides of the House—we appreciate that landlords need to manage their financial risk. They have a number of ways to do this. The amendment would not ban guarantors; it simply seeks a way to end discrimination and ensure that guarantors are not overused and commonplace, and that they are used when they are genuinely needed. It is about restoring proportionality and fairness to the use of guarantors.

I thank my noble friend Lady Taylor of Stevenage for her reply, and her engagement and understanding on this issue, and for continually meeting me and other stakeholders. Of course, we are disappointed that the Government will not accept the amendment, and I am particularly disappointed about the guidance not being issued. However, I appreciate the issues around the guidance, about discrimination and the discriminatory nature of the overuse of guarantors, and her commitment that guarantors will be included in the evaluation of the impact of the Bill. Of course, I am always very happy that she will meet me and other stakeholders.

I am firmly of the belief, as I am sure other noble Lords are, including my noble friend Lady Lister of Burtersett and my friend, the noble Baroness, Lady Grender, that the overuse of guarantors seriously undermines the anti-discrimination intentions of the Bill. We welcome the guidance from my noble friend the Minister. Having said that, I will not be pressing it to a vote, and I beg leave to withdraw my amendment.

Amendment 61 withdrawn.