This is a question to the blog clinic from Julie, who is a guarantor in England.
My daughter has received 4 x S13 notices for her bed sit all have been incorrect, dates amounts etc. They sent a S13 notice a month ago then retracted it, they stated sent in error.
They now state that she owes over £600 in back rent. I am a guarantor but have never received any of these notices. However, I receive emails about other aspects regarding the maintenance of the building etc
Where do we stand? I’m confused and have requested all the section 13 notices received to compare the issues with each one. I thought they were only allowed to send 1 x S13 notice per year.
Not sure how to proceed !!!
Answer
If you are a guarantor, then if the rent has been increased, this will have invalidated your guarantee.
Your guarantee was in respect of the rent as set out in the tenancy agreement. If the rent has been increased, then you are not liable – as you did not agree to guarantee that higher rent.
This is why landlords need to get guarantors to sign new guarantee deeds when the rent is increased.
However, it sounds as if the rent may not have been increased if they have made that much of a mess of the section 13 notices!
Probably the best thing is to ask them for a schedule of arrears showing how this alleged £600 arrears figure arose. Then, if the schedule shows that the rent has gone up, ask for proof of this. If the proof is a defective s13 notice, then reply saying that the rent has not increased as the notice was defective.
If it looks as if the notice was correct and the rent may have gone up, then you can tell them that the rent increase has invalidated your guarantee!
I agree with the advice about checking the s.13 notices but I disagree with the statement that ‘if the rent has been increased this will have invalidated the guarantee’. I have read the Landlord Law Services page and I disagree with the advice on this point there also.
I agree with what Shelter say: ‘Rent increases could be enforceable if the tenancy contains a rent review clause and the guarantee specifies rent due ‘under the tenancy’ (or similar).’
https://england.shelter.org.uk/professional_resources/legal/costs_of_renting/guarantors_for_tenancy_agreements#reference-8
My own guarantee clause states:
1. Because the Landlord is not willing to grant this Lease to the Tenant without a guarantee the Guarantor at the request of the Tenant hereby guarantees the performance by the Tenant of all the Tenant’s obligations under this Lease, including without limitation the due payment on demand of all monies (including Interest) at any time due and owing to the Landlord by the Tenant and the following provisions shall apply to such guarantee…..
My residential leases are always executed as deeds, they contain rent review clauses, and reviews are conducted according to the s.13 procedure. At the conclusion of the review process the tenant becomes liable for the increased rent, which is therefore money due and owing to the landlord by the Tenant. I send a copy of s.13 notices to guarantors and invite them to liaise with the tenant to ensure that they are aware of negotiations about the revised rent. At the conclusion of negotiations I inform the guarantor of the revised rent. However I don’t invite guarantors to sign the rent review memorandum because they remain bound by their guarantee and i don’t want to give them the misleading impression that they can control the process or resile when it is complete. They cannot.
It isn’t possible to both have a tenancy agreement with a rent review clause and to conduct those reviews “according to the s.13 procedure”.
For a rent review clause to be useful, it has to be a “provision… under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period”, which precludes the use of s.13 [s13(1)b].
Any rent review clause that doesn’t define a rent increase so that a guarantor can understand exactly what increase they are agreeing to in advance is almost certainly going to fail as unfair because of the lack of certainty.
Guarantee agreements are helpful as pressure, particularly in student letting, but are otherwise best treated as nice-looking, but unenforceable.
You are correct about s13 not applying. That was a mental glitch. Your comment made me check the wording of our rent review clause – thankfully it is watertight.
Its possible that I am wrong of course.
But I can’t see how someone can be liable as guarantor for a tenancy at a rent which is different from the rent they agreed to guarantee and which they have not consented to. It goes against contractual rules.
Has your guarantee ever been tested in the courts?
Does anyone have experience of a case where a guarantor was actually held liable at court for an increased rent they had not consented to?
The Guarantor does not guarantee a specific amount of rent. They guarantee the tenant’s obligations. The tenant is obliged to pay increased rent following a lawful review.
Brown-Forman v Bacardi [2021] EWHC 1259 (Comm)
Dowling v Promontoria (Arrow) Ltd [2017] Lexis Citation 292, [2017] BPIR 1477, [2017] All ER (D) 82 (Sep)
Torminster Properties Ltd v Green [1983] 1 WLR 676 (CA)
Those are all commercial cases. Tenancies are invariably consumer contracts, and in most cases the guarantors will also be consumers and so the unfair terms rules in the Consumer Rights Act 2015 will apply.
It is, of course, possible that a future court will hold that a guarantor is liable for a rent which is increased under the s13 procedure, but I would be surprised if this happened. The safest course of action (if you are a landlord) is to get new forms of guarantee signed.
Being commercial cases does not make them irrelevant and the last one (Torminster) is quoted by Shelter in the context of guarantee agreements on their professional advice webpage (I recollect I’ve quoted this before: https://england.shelter.org.uk/professional_resources/legal/costs_of_renting/guarantors_for_tenancy_agreements#reference-8).
In ParkingEye Ltd v Beavis [2015] UKSC 67 the Supreme Court held that a contract term is not unfair if it is transparent, proportionate, brought to the consumer’s attention, serves a legitimate interest, and does not cause a significant imbalance or detriment if the consumer is made fully aware of the obligation and its purpose.
I suspect that one day there will be a case which directly concerns the enforceability of rent guarantee agreements following reviews because (from memory, I’m short of time) the Renters’ Rights Bill allows for rent reviews and guarantor agreements (it certainly did the last time I looked), therefore sooner or later a landlord will seek to enforce such an agreement in court. Then we will know. It’s unlikely to be me, I only have 4 residential tenants now and they are all good people who would come and tell me if they had a problem about paying their rent or anything else.
Why do articles like these so often skirt over the exisitence of “contractual” tenancies that specify continuing on by design afer the fixed term (rather than by default of the tenant remaining in situ) and which usually have an in-built RPI-linked rent-increase clause which presumaby a guarantor would be agreeing to honour as it is already in the contract?
A contractual periodic tenancy is most likely to be an assured shorthold tenancy. The fact that the post fixed-term periodic tenancy is contractual will not change this. These will all be abolished after the Renters’ Rights Bill becomes law and comes into force. All ASTs will be converted to periodic assured tenancies.
I forgot to mention above that clauses providing for guarantors to be bound by future rent increases are likely to be invalid under the unfair terms rules in the Consumer Rights Act 2015.
There’s a good argument that RPI-linked rent increases are automatically unfair in consumer contracts, because neither party knows what RPI will be in the future, so it’s very difficult to know what the two parties are actually agreeing to.
The Renters’ Rights Bill resolves this for tenancies by making all such price change clauses void.