What Is a Guarantor & How Can They Help?

In the world of rental properties, individuals looking to rent may come across the term “guarantor” while going through the process of securing a lease. But what is a guarantor for a rental property? 

A guarantor is someone who agrees to co-sign a rental agreement and takes on the responsibility of paying the rent in the event the tenant is unable to fulfil their financial obligations. This provides assurance to landlords that the rent will be paid, even if the tenant faces financial difficulties or other unforeseen circumstances.

The use of a guarantor is particularly beneficial for tenants who may not have a strong credit history or sufficient income to meet the landlord’s requirements. Often, a guarantor is an immediate family member, but it can also be a friend or colleague who has a stable financial background and a good credit score.

In order to be approved as a guarantor, they must demonstrate a certain level of financial stability, which may include providing proof of income, assets, and a clean credit report. Overall, the guarantor plays a crucial role in ensuring a smooth rental experience for all parties involved, while offering peace of mind for landlords and tenants alike.

It is essential for both the tenant and the guarantor to fully understand the responsibilities they are taking on, as the guarantor becomes legally liable for any unpaid rent or property damages.



The role of a guarantor is of great importance in the rental process. They offer a commitment to pay the rent and cover any damages if the tenant is unable to do so. This provides a financial safety net for landlords: when a tenant fails to meet the necessary income, credit, or rental history requirements, they may require a guarantor to not only qualify for the rental property but also protect against possible rental default. 

Being a guarantor is voluntary, and tenants must seek out someone who is willing to take on this responsibility.

Get A Rental Property Appraisal

Maximise the potential of your property investment


In New South Wales (NSW), Australia, guarantors follow specific rules and regulations to ensure the rights of all parties involved.

The responsibilities of a guarantor can be extensive. They may be held accountable for various aspects of the rental agreement, including:

  1. Paying outstanding rent: If a tenant falls behind on rent payments, the guarantor steps in and is legally responsible for covering the unpaid amount.
  2. Covering property damage: Should any damage occur to the rental property during the tenant’s residency, the guarantor may be responsible for covering repair costs.
  3. Addressing rental contract violations: As a guarantor, one must also address and resolve any lease violations made by the tenant.
  4. Financial liability beyond renting period: In some cases, guarantors may still be held responsible for the tenant’s debts even after the lease has expired or been terminated.

Despite the substantial responsibilities, guarantors play a crucial role in providing renters with an opportunity to secure a rental property when they may not meet the qualifications themselves.

 It’s essential for both tenants and guarantors to understand the legal implications and make well-informed decisions when entering into such agreements.


When becoming a guarantor for a rental property, it is important to understand the legal aspects and potential liabilities involved. 

In NSW, a guarantor agrees to be legally responsible for paying the rent and any outstanding fees if the tenant is unable to fulfil their obligations under the lease agreement. This responsibility extends to covering any damages or unpaid rent, should the tenant default. As a guarantor, one must be aware that their assets might be at risk if the tenant fails to meet their rental obligations.

Agreement Termination

A guarantor’s liability typically continues until the lease is terminated. In the event of a lease breach or early termination, the guarantor might still be liable for any remaining payments or fees owed under the lease agreement. Furthermore, if the rental agreement is renewed or extended, the guarantor’s obligation might also be carried over into the new lease period. 

It is essential for guarantors to have a guarantors agreement and to be aware of the terms and conditions of the lease agreement, as well as any potential renewals or extensions, to ensure they understand the extent of their legal responsibilities.

Absolutely not – it is illegal to ask for a guarantor for a residential lease in NSW and cannot be enforced. If you use a guarantor, it must be of your own volition and not at the request of a landlord or the property management. 

Qualifying as a Guarantor

A guarantor for a rental property is someone who agrees to be legally responsible for the tenant’s financial obligations, such as rent payments, should the tenant be unable to fulfil them. In NSW, there are certain criteria that a potential guarantor must meet to qualify.

Sufficient Income

First and foremost, a guarantor must have a stable and sufficient income. Generally, this means earning at least three to four times the monthly rent of the property. This ensures that the guarantor can comfortably cover the rent payments if the tenant is unable to do so. Additionally, guarantors may need to provide proof of employment, payslips, or tax returns to demonstrate their income stability.

Good Credit History

Another important aspect of qualifying as a guarantor is having a good credit history. Landlords in NSW require guarantors to undergo credit checks to verify that they are financially responsible and can be relied upon in case the tenant defaults on rent payments. A person with a high credit score, minimal debt, and a history of making timely payments will be more likely to be accepted as a guarantor.

Residential Status

Lastly, residential status plays a role in determining eligibility for serving as a guarantor. In most cases, guarantors must be Australian citizens or permanent residents. This is because they are more accessible to landlords and are less likely to leave the country if the tenant defaults on their rent. Guarantors must also provide proof of residential status, such as a copy of their passport or permanent residency documentation.

In summary, to qualify as a guarantor for a rental property in NSW, Australia, an individual must meet certain income requirements, have a good credit history, and have a valid residential status. By meeting these criteria, they demonstrate their ability to take on the financial responsibility of ensuring the tenant’s obligations are met.

Risks and Challenges for Guarantors

Financial Risks

A guarantor for a rental property takes on significant financial risks. If the tenant defaults on rent payments, the guarantor becomes legally responsible for covering the outstanding amount. This financial obligation can be burdensome, especially if the tenant’s debts are substantial or ongoing.

Additionally, guarantors may find themselves liable for any damage caused to the rental property by the tenant, which may include repair costs or replacement of damaged items. Such financial risks can lead to strained personal relationships with the tenant and possible negative impacts on the guarantor’s credit rating.

As a guarantor in NSW, one must be aware of the potential legal implications of their role. For instance, if the tenant is evicted due to non-payment of rent or for violating the lease terms, the guarantor may face legal action for not fulfilling their obligations.

Another possible legal implication is the impact on the guarantor’s ability to apply for future credit or loans. Their financial commitments as a guarantor are considered when assessing their borrowing capacity, which may result in reduced borrowing power, declined loan applications, or higher interest rates.

Choosing the Right Guarantor

Relationship to Tenant

When selecting a guarantor for a rental property, it is essential to consider the relationship between the guarantor and the tenant. While legally anyone can act as a guarantor, landlords and property managers typically prefer a family member or close friend. The reason for this preference is that a family member or close friend is more likely to be invested in the tenant’s wellbeing and committed to fulfilling their obligations as a guarantor if the need arises.

Financial Stability

Another critical factor when choosing a guarantor is their financial stability. A guarantor should have a strong credit history, stable income, and ideally own property. Their income should be sufficient to cover the tenant’s rent if the tenant is unable to make payments. The following may be considered when evaluating a guarantor’s financial stability:
  • Employment status: A guarantor with a secure and stable job is more likely to meet their financial obligations. If the guarantor is self-employed or has an unstable work history, it may pose a higher risk to the landlord.
  • Credit history: A guarantor with a good credit history shows that they have a history of responsible financial management and timely bill payment, increasing the likelihood of them covering the rent if required.
  • Property ownership: Owning property can be advantageous as it demonstrates financial stability and responsibility.

In conclusion, tenants should ensure that their chosen guarantor not only meets the legal requirements and financial stability but also has a trustworthy and supportive relationship with the tenant. By selecting the right guarantor, tenants can increase their chances of securing a rental property while providing landlords with the confidence that rental payments will always be met.

Key Takeaways

Need Guidance on Leasing? Contact Leah Jay Today

Whether you’re a landlord or a renter, understanding your roles and responsibilities in regards to the NSW tenancy laws is important. 

Leah Jay is an expert team of property managers and would be happy to assist you by answering all your queries.

For lease and property management services, contact us today.

Disclaimer: This information is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your situation, and for professional advice, seek out a financial adviser.