"While the Renters' Rights Act is designed to improve security for tenants, it also significantly changes the way landlords manage financial risk within the private rental sector"
- Sam Reynolds - Zero Deposit
The proportion of tenants requiring a rent guarantor could nearly double following the introduction of the Renters' Rights Act, according to new analysis by deposit alternative provider Zero Deposit.
The research examined average rent prices and earnings across England's 288 local authority districts to identify where renting falls outside the commonly used affordability benchmark, which holds that tenants should earn at least 2.5 times their annual rent.
Currently, tenants are likely to need a guarantor in 19.8% of local authority districts. Zero Deposit calculates that the figure could rise to 47.6% under the new legislation.
The average renter in England already falls short of standard affordability requirements. With average rents at £1,438 per month, or £17,256 per year, tenants typically need to earn at least £43,140 annually to pass affordability checks. Average earnings across England sit at £41,859, leaving the typical renter £1,281 below the required threshold.
London contains 22 local authority districts where average incomes fall below the affordability threshold, while the South East has a further 21 such areas.
The Renters' Rights Act (RRA) restricts the traditional methods landlords have used to manage financial exposure, including requesting larger upfront rent payments as a way to reduce the risk of rent arrears. Pre-RRA data from the English Housing Survey shows that 21.5% of private renters paid more than one month's rent in advance. With that option no longer available, many landlords are expected to seek alternative forms of financial protection.
One likely response is a tightening of affordability criteria. If the industry standard shifts from 2.5 times income to 3 times income, average earnings in 137 local areas would fall below the threshold, pushing the proportion of affected districts from 19.8% to 47.6%.
Demand for guarantors is also expected to grow among tenant groups that already face vetting challenges, including the self-employed, students, overseas applicants and those with a limited rental history.
"While the Renters' Rights Act is designed to improve security for tenants, it also significantly changes the way landlords manage financial risk within the private rental sector," said Sam Reynolds, chief executive of Zero Deposit.
"With restrictions on upfront rent payments and fewer traditional safeguards available, landlords and agents naturally place greater emphasis on affordability checks and income protection when assessing prospective tenants.
"As a result, we expect guarantors to become an increasingly common requirement for renters who fall outside standard affordability criteria, particularly younger tenants, overseas applicants, self-employed workers, and those moving to high-cost rental areas.
"The challenge is that the traditional guarantor model is no longer practical for many renters. Not every tenant has access to a suitable guarantor, and even when one is available, the referencing and verification process can introduce delays at a point where rental properties move extremely quickly.
"This is why we're seeing growing demand for regulated alternatives such as Guarantor+. By combining regulated protection, instant decisions and fair value, Guarantor+ helps landlords and agents manage rental risk with greater confidence, while helping tenants to secure homes faster and with fewer unnecessary barriers. In the few months since launch, 24% of letting agent properties are available with this product.
"In a market increasingly shaped by speed, compliance, and risk management, solutions like Guarantor+ keep tenancies moving, creating a more efficient, accessible, and dependable rental market for all."
