Guarantor Services vs a Personal Guarantor: Which Should Landlords Accept?

When an applicant cannot quite clear your affordability checks, the choice of guarantor service vs personal guarantor is one of the most consequential decisions you will make as an England landlord. Both promise to cover the rent if the tenant defaults, but they differ sharply in cost, enforceability and how much real protection they give you. Getting this right matters more than ever now that Section 21 is abolished and arrears must be pursued through the Section 8 process, your paperwork has to hold up the first time, because there is no longer a no-fault shortcut to fall back on.

This guide compares the two routes in depth, explains how each works in practice, shows where each one fails, and walks through a worked example so you can see the financial difference in pounds and pence. It is written for the law in force in England in June 2026 under the Renters’ Rights Act 2025.

Guarantor service vs personal guarantor: the core difference

A personal guarantor is a real person, usually a parent, relative or close friend of the tenant, who signs a deed of guarantee promising to pay the rent (and often to cover damage and other tenancy breaches) if the tenant does not. You verify and reference that person yourself, you draft the deed yourself, and you enforce the guarantee yourself if things go wrong.

A guarantor service (sometimes “guarantor-as-a-service” or a rent guarantor company) is a commercial provider the tenant pays a fee to. For applicants who have no suitable UK-based guarantor, international tenants, students, the recently self-employed, those moving from benefits into work, the company steps in and acts as guarantor, or issues a guarantee the landlord can call on if the tenant stops paying. Crucially, the tenant pays the fee, not you.

The headline trade-off is simple to state and easy to get wrong:

• A personal guarantor costs you nothing but depends entirely on one individual’s means and goodwill.
• A guarantor service is professionally underwritten and far more reliable to claim against, but introduces a third party with its own terms, exclusions, caps and claims process.

In other words, you are choosing between free but fragile and paid-for-by-the-tenant but conditional. Neither is automatically “better”; the right answer depends on the specific applicant in front of you.

How a personal guarantor works

A personal guarantor agreement is a deed of guarantee signed by the guarantor before the tenancy begins. To be worth anything it must be drafted and executed correctly. In practice that means it should:

• Be executed as a deed, signed, witnessed and clearly stated to be a deed, because a guarantee given for no direct consideration to the guarantor is generally only enforceable when made by deed.
• Clearly define what is guaranteed: rent, interest on late rent, damage beyond fair wear and tear, and any other tenant liabilities you want covered. Vague drafting is the single most common reason guarantees collapse in court.
• Survive into the periodic tenancy. Since the Renters’ Rights Act 2025 made all assured tenancies periodic (there are no fixed terms any more), your guarantee must be drafted to continue for the life of the rolling tenancy rather than lapse at the end of an old “fixed term” that no longer exists. A guarantee that says it covers “the initial 12-month term” is now a guarantee with a built-in expiry date.
• Make clear whether the guarantor’s liability is joint and several with the tenant, so you can pursue the guarantor directly without first exhausting the tenant.

You should reference the guarantor much as you would a tenant: confirm identity and current address, run a credit check with consent, and verify that they have the income or assets to actually meet a year’s rent if called upon. A guarantor on a low income, on benefits, or with no UK assets is a guarantee in name only, it looks reassuring on file and pays out nothing in reality.

For the clauses a deed of guarantee must contain to be enforceable, see our guide on what to include in a guarantor agreement, and the background on what a tenancy guarantor is and their liability.

Strengths of a personal guarantor

• No cost to either you or the tenant, nothing to deduct from the rent, no fee to question.
• Personal pressure works. A parent or close relative is highly motivated to keep the tenant paying, because their own money and relationship are on the line. Many arrears situations are quietly cleared by family before they ever reach a formal claim.
• No third-party terms. You control the wording, the scope and the claim, there is no provider deciding whether your situation qualifies.

Weaknesses of a personal guarantor

• Enforceability rests on one person’s means. If they cannot pay, the guarantee is worthless however well it is drafted.
• You bear the enforcement burden: chasing the guarantor, and if necessary suing them through the County Court (typically the money claim route), with all the time and cost that involves.
• Documentation errors are rife. No deed (just a signature), vague wording, a guarantee that lapsed with the old fixed term, or no witness, any of these can render a personal guarantee unenforceable exactly when you need it.
• A relative’s circumstances can change: redundancy, illness or their own debts can hollow out a guarantee you signed years earlier.

How a guarantor service works

A guarantor service charges the tenant a fee, commonly a percentage of the annual rent (often in the region of several weeks’ rent) or a fixed monthly amount, in exchange for guaranteeing the rent to the landlord. The company underwrites its own exposure: it references and risk-assesses the tenant before agreeing to act, much as an insurer would. When the tenant defaults, you submit a claim to the company and, subject to its terms, it pays you the arrears.

Some services act as a named guarantor on the tenancy agreement itself; others sit alongside the agreement and issue a separate guarantee document. Either way, the practical effect for you is a corporate covenant in place of (or in addition to) an individual one.

Strengths of a guarantor service

• Reliable covenant. A funded, often regulated company is far more likely to actually pay a valid claim than an individual relative whose finances you cannot fully see.
• No referencing burden on you for the guarantor, the company underwrites its own risk and decides whether to back the tenant.
• Tenant pays the fee. Because the tenant contracts with and pays the provider, this does not breach the Tenant Fees Act 2019 ban on landlords charging tenants for a guarantor. You are not the one levying the charge, but never structure it so that the cost is passed to the tenant through you, which would be a prohibited payment.
• Predictable process. A professional claims procedure, with documented steps, can be easier to navigate than litigating against a reluctant family member.

Weaknesses of a guarantor service

• It comes with exclusions, caps and a defined claims process. Read the terms closely: some cover only a set number of months’ rent; some require you to have served notice or taken specific steps before they pay out; some exclude damage entirely and cover rent only.
• The protection usually lasts only while the tenant keeps paying the service. Check what happens at renewal and whether cover automatically continues into the second year of a periodic tenancy.
• A claim can be refused on a technicality if you have not followed the provider’s process to the letter, the mirror image of the documentation risk on the personal-guarantor side.
• It is not a substitute for referencing the tenant. A service tells you the rent is backed; it does not tell you the tenant will look after your property or be easy to deal with.

Comparison table

A worked example

Consider a one-bedroom flat let at £1,200 a month to a recently self-employed applicant whose income cannot yet be evidenced over a full trading year. The tenant offers their father as guarantor, but the father is retired on a modest pension and owns no property outright. Alternatively, the tenant can pay a guarantor service.

Scenario A, personal guarantor (the father). The deed costs nothing to put in place. Six months in, the tenant falls two months behind (£2,400). You call on the guarantee, but the father’s pension barely covers his own outgoings. You issue a County Court money claim, win, and obtain judgment, but enforcement against a low-income pensioner recovers little, and slowly. The guarantee existed on paper but delivered almost nothing, and you have lost months and incurred claim fees.

Scenario B, guarantor service. The tenant pays, say, around 5% of the annual rent (roughly £720) to a provider, at no cost to you. The same two-month arrears arise. You follow the provider’s claims process, serving notice and submitting evidence as required, and the company pays the £2,400 within its capped limit. You recover the rent, the tenancy can continue, and the arrears never reach the three months’ (or 13 weeks’) threshold that Ground 8 requires for mandatory possession.

The example shows the real point: with a solvent guarantor, Scenario A is cheaper and just as robust. The problem is that this applicant’s only available personal guarantor is not solvent enough to be worth anything, which is precisely the situation a service is designed for.

Which should landlords accept?

There is no universal answer, it depends on the applicant in front of you and your appetite for admin and risk.

Lean towards a personal guarantor when: the tenant has a UK-based relative with clear, evidenced income or assets; you are comfortable referencing that person; and you can produce a properly drafted deed that survives into the periodic tenancy. This is the cheapest route and, with a solvent guarantor, perfectly robust.

Lean towards a guarantor service when: the applicant has no suitable UK guarantor (overseas tenants, students, recently self-employed); the proposed personal guarantor cannot evidence sufficient means; or you simply want a professionally underwritten covenant you can rely on without chasing an individual through the courts.

Whichever you choose, still reference the tenant properly. A guarantor, personal or commercial, protects your rent, not your peace of mind. You want a tenant who actually pays and looks after the property, not just a backstop for when they do not. Work through our tenant referencing guide for England first, and only then decide on the guarantee.

It is also worth weighing a guarantor against rent guarantee insurance, which protects your income directly and can be combined with either route. See guarantor or rent guarantee insurance for the cost and cover trade-offs, and do I need a guarantor at all to decide whether to ask in the first place.

A note on arrears and possession

Under the Renters’ Rights Act 2025, Section 21 no longer exists and there are no fixed-term tenancies, every assured tenancy is now periodic, and a tenant can end it on two months’ notice. If a tenant falls into serious arrears you must rely on the Section 8 grounds. Ground 8 (the mandatory arrears ground) now requires at least three months’ (or 13 weeks’) rent to be outstanding both when you serve notice and at the hearing, and the notice period for that ground is longer than it once was. A reliable guarantee, one that actually pays, can clear arrears before they reach that threshold, keeping the tenancy alive and avoiding court entirely. That is why the enforceability of your chosen guarantee, not just its existence, is genuinely valuable now. Always use the current prescribed Section 8 form on GOV.UK and check the grounds on legislation.gov.uk.

Frequently asked questions

Can I require a tenant to use a guarantor service?

You can ask for a guarantor as a condition of letting, and you can accept a guarantor service the tenant chooses to use. What you must not do is charge the tenant for a guarantor yourself, or pass a guarantor cost to them through you, that would be a prohibited payment under the Tenant Fees Act 2019. When the tenant contracts directly with and pays the service, the fee is theirs, not a charge from you.

Is a guarantor service the same as rent guarantee insurance?

No. A guarantor service is paid for by the tenant and acts as (or provides) the guarantor on the tenancy. Rent guarantee insurance is a policy the landlord buys to insure their own rental income, usually conditional on having referenced the tenant properly. They can complement each other, but they are different products bought by different parties.

Does a personal guarantee still work now that tenancies are periodic?

It can, but only if it is drafted to survive into the periodic tenancy rather than expire at the end of a fixed term, because fixed terms no longer exist. A guarantee tied to “the 12-month term” risks lapsing. Make sure the deed covers the rolling tenancy for as long as it continues. Our guarantor agreement guide covers the wording.

How much does a guarantor service cost the tenant?

Pricing varies by provider, but it is commonly a percentage of the annual rent or a fixed monthly amount; figures in the region of a few weeks’ rent for a year’s cover are typical. Always check the renewal cost, the maximum number of months covered, whether damage is included, and the exact steps you must follow to make a successful claim.

What if the guarantor service refuses my claim?

Claims are usually refused because a required step was missed, for example, not serving the right notice, not providing evidence in the format required, or claiming beyond the policy cap. Read the terms before you accept the service, keep a clear record of arrears and communications, and follow the process precisely. If you believe a valid claim has been wrongly refused, the provider’s complaints procedure and, ultimately, the courts are open to you.

Should I accept a guarantor who lives outside the UK?

Be cautious. An overseas personal guarantor is often very difficult to enforce against in practice, because pursuing a judgment abroad is slow and expensive. For applicants whose only available guarantor lives overseas, a UK-based guarantor service is frequently the more reliable choice precisely because the covenant is enforceable here.

Coming soon

Tenancy Pilot is launching soon and is being built to support both routes with the right paperwork. You will be able to generate a properly executed deed of guarantee for a personal guarantor, one drafted to survive into the periodic tenancy rather than lapse, and keep your guarantor-service documentation, claim references and deadline reminders organised in one command centre alongside the rest of your tenancy. Join the waitlist to be first to create a compliant guarantor agreement the moment we launch.

This article is general information for England landlords, not legal advice. Always check the current rules on GOV.UK and legislation.gov.uk, and consult a qualified solicitor before relying on any guarantor arrangement.