A trusted service provider can help lock in a new tenancy efficiently. Agencies can and do enter partnerships with service providers, including professional rent guarantor services such as RentGuarantor, a Propertymark Industry Supplier. Recommendations can be very useful for renters using a service for the first time or those in a hurry to secure a tenancy.
Lettings and referencing agencies promote consumer choice and fairness. Ultimately, the decision to use a service to secure a tenancy sits entirely with the renter, and the landlord then agrees that it meets their requirements. Due diligence is crucial to protect clients and customers, whether making a recommendation or assessing the suitability of a service provider brought by a prospective tenant.
The spotlight will fall on how agents, landlords and service providers align with the law under new rules. This will in turn lead to refined standards and stricter regulatory expectations. So how can agents remain compliant and responsible when it comes to customer choice, and why is it so important?
Why is choice important?
Agencies that do not offer a choice of rent guarantor options could breach the Tenant Fees Act.
This could apply where agencies recommend a single choice of provider or service without any alternative. It could also apply if a prospective tenant brings in their own service provider and – for reasons that suit the agent rather than the renter or the landlord – is declined.
- Choice is good for reputation. Empowering tenants with objective, transparent information builds trust, creates future opportunities, and avoids any perception of bias or that products are recommended solely for commercial purposes.
- It is good for business. A range of options that best suit the requirements of the landlord and the tenancy – and the renter’s own risk profile – will more likely result in a successful application.
What makes a recommendation fair?
If a rent guarantor is required to secure a tenancy, then the renter should have the option of either a personal contact (who meets the criteria) or a professional provider. If they need or want to use a professional guarantor service, then a choice of suitable providers should be offered.
The renter must be allowed to research and choose their own service provider independently; there should be no pressure to choose only from an approved shortlist, and you need to be prepared to provide valid reasons for not accepting a tenant’s choice of service provider.
- Do not suggest that any one provider is compulsory, even indirectly. Offer a shortlist of suitable and qualified providers that fulfil the needs of the tenancy
- Provide clear, simple and comparable information on any service provider you are recommending. Help the renter understand that they are free to choose
- Be honest about any commercial arrangements you have in place with any provider. Transparency is recommended if you receive a revenue share or commission for recommendations
- Guide — don’t persuade
Due diligence is key
Since the Renters’ Rights Act was announced, we have seen an influx of rent guarantor providers. Landlords and tenants should be encouraged to take time and care to understand the product or service they are purchasing, making sure it is fit for purpose. Agents should research the providers they are happy to accept and the reasons why. Does the level of cover align comfortably with your responsibilities to landlords and tenants? For example, a provider may cover rent liabilities for a limited period, which might not give the level of support that a landlord requires.
Insurance products marketed as ‘guarantees’ can blur the distinction between insurance and professional guarantor services. In some cases, guarantor products can appear to operate more like insurance policies. This is particularly important given that insurance is a regulated financial service, whereas professional rent guarantor services are not. These products are not the same and should be considered separately to meet different needs and requirements.
Rent Guarantor
RentGuarantor.com are the UK’s only London-listed rent guarantor provider. We do exactly as they name suggests: the company acts as the rent guarantor for tenants in exchange for a fee.
