Deed of guarantee vs letter of guarantee — why execution matters
A deed of guarantee does not require consideration and is enforceable by virtue of proper execution. A letter of guarantee requires consideration — value flowing from the landlord to the guarantor in exchange for the guarantee — which may be absent where the guarantee is given after the tenancy has started.
- A deed must: be in writing; be signed by the guarantor in the presence of a witness who attests the signature; be delivered as a deed
- The witness must be an adult who is not a party to the deed and not the guarantor's spouse or civil partner; must be physically present when the guarantor signs
- Incorporated guarantor schedule vs standalone deed: both work provided execution formalities are satisfied; ensure the guarantor is not inadvertently made a joint tenant
- Limitation period: 12 years for a claim on a deed; 6 years for a claim on a simple contract guarantee
Scope of the guarantor's liability — what the guarantee should cover
The scope of the guarantor's liability depends entirely on the wording of the guarantee. A well-drafted guarantee covers: all rent (including increases); dilapidations and property damage; the landlord's reasonable legal costs of enforcement; and the entire duration of the tenancy.
- Rent arrears: include all rent payable, including during any void period after the tenant vacates; confirm whether Section 13 rent increases are covered
- Dilapidations and property damage: must be expressly covered; without this, guarantor liability may be limited to rent alone
- Legal costs: include the landlord's reasonable legal costs of enforcing the guarantee
- Duration: specify the liability period — a fixed period (e.g. 12 or 24 months) or 'for so long as the tenancy continues'; for post-RRA 2025 periodic tenancies, a capped duration provides certainty for both parties
The Renters' Rights Act 2025 and guarantor liability — the periodic tenancy challenge
The RRA 2025 abolishes fixed-term assured tenancies from 1 May 2026 and converts all existing ASTs to periodic tenancies. This creates uncertainty about the extent of guarantors' liability where the guarantee was drafted by reference to a 'fixed term'.
- Pre-RRA 2025 case law: some courts held that a guarantee of 'the tenancy' did not extend to a new statutory periodic tenancy arising at end of fixed term
- RRA 2025 transition: the statutory conversion from fixed-term to periodic is different from a contractual periodic tenancy — courts have not yet determined whether guarantors remain liable post-conversion
- Best practice for new tenancies: include wording that expressly extends the guarantee to the periodic tenancy and any Section 13 rent increases; avoid wording tied to a fixed-term duration
- Capped duration: a guarantee capped at a fixed duration (e.g. 24 months) is easier to obtain and provides certainty; open-ended guarantees for perpetual periodic tenancies are increasingly resisted by guarantors
Pursuing a guarantor — formal demand, court claim, and guarantor's right of indemnity
Where the tenant has defaulted, the landlord can pursue the guarantor for rent arrears, dilapidations, and costs through the County Court. The guarantor who pays has an automatic right to recover the amount from the tenant.
- Formal demand: send a written demand specifying amounts owed and a payment deadline; creates a paper trail and may prompt payment without proceedings
- Small Claims Track (up to £10,000): issue at County Court via online money claims portal (MCOL); no legal representation required; court fee proportionate to claim
- County Court Fast Track (£10,001-£25,000) or Multi-Track (above £25,000): legal representation advisable
- Guarantor's right of indemnity: a guarantor who pays the landlord has an automatic right to recover the amount from the tenant — the guarantor is not the ultimate loss-bearer