Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Government Issues Warning Over Professional Rent Guarantor Contracts

The government has published updated guidance on the Tenant Fees Act following the introduction of the Renters’ Rights Act. The new advice warns that professional rent guarantor service contracts issued before 1 May 2024 may be invalidated.

The guidance states that after 1 May, tenants may choose a professional rental guarantor service, but it is considered a prohibited payment if tenants are required to take out such insurance as part of a tenancy agreement and are not given the opportunity to freely choose their provider. This update is relevant for landlords and letting agents who use or recommend professional rent guarantor services.

The guidance also notes that if a guarantor agreement was entered into before 1 May 2026, the terms of that agreement may be affected by the tenancy reforms included in the Renters’ Rights Act. It advises guarantors to review any existing agreements and obtain the landlord’s consent to any necessary variations. The government further suggests that tenants or guarantors seek independent legal advice if they are unclear about whether an agreement is affected.

The Negotiator reports that it has contacted the Ministry of Housing, Communities and Local Government for clarification on what variations may be required, but has not yet received a response.

Bruce Evans, Chief Commercial Officer at RentGuarantor, commented that the updated guidance does not undermine existing guarantor agreements for RentGuarantor’s customers. He stated that their contracts have been reviewed for compliance and that updates were not required. Evans also highlighted the importance of consumer choice and fairness, noting that agencies who do not offer a choice of rent guarantor options could be in breach of the Act.

This development is significant for UK letting agents and inventory clerks, as it may affect the validity of existing guarantor agreements and the way such services are offered to tenants. Agencies are advised to ensure tenants are given a choice of provider and to review their current practices in light of the updated guidance.