Have you just found you perfect student accommodation only to be told that you need to pay up front? You’re not alone – a lot of student accommodation providers in Ireland require the total rent to be paid in one lump sum (or two instalments) up front for the entire duration of the contract – that’s typically over €10,000 for a standard 41 or 51 week contract which can be pretty damn hard to pay up front! They will tell you that the only way around this is to provide a guarantor (someone who agrees to pay your rent if you’re unable to, for example one of your parents or a close relative) – this will enable you to pay in multiple, budget friendly instalments or even monthly in some instances.
Ok, that sounds great doesn’t it!? Very simple….
Not quite…this is actually where it gets a little complicated for international students!
The thing is that some residences require the guarantor to be based in Ireland which can be very challenging for international students given they don’t have friends or family here. This is when the dreaded third party guarantor service enters the conversation…it’s essentially a company which will act as a guarantor for students (for a sometimes expensive fee!) who don’t have an Irish based guarantor. Using a third party guarantor company is expensive, the process is cumbersome and overall it’s not something that we’d recommend.
But don’t despair! We have alternative options for international students who wish to pay via multi-installments…it doesn’t have to be this difficult.
What we recommend is that you shop around with different student accommodation providers. We work with lots of great student accommodation providers who are much more relaxed when it comes to the geographical location of your guarantor. They might require a guarantor but the guarantor can be a friend or family member based anywhere in the world so you wont need to waste money on third party guarantor services. Simply contact us and we’ll help you find the best option based on your accommodation needs and payment preferences.
So what does this all really mean. Let’s examine it more closely below:
What is a Guarantor?
A guarantor is a person who contractually agrees to pay your rent if you’re unable to pay, for example one of your parents or a close relative (even a friend is ok!). This guarantor must demonstrate that they are eligible and provide documentation regarding their proof of income etc.
Who can be a rent guarantor?
There are may definitions however each guarantor typically must:
- Be aged between 18 and 75 years old
- Be able to pay your rent should they need to do so
- Be an Irish resident (some residences permit a guarantor from anywhere in the world)
Wait a minute…did you say the rent guarantor must be Irish?
Only some student accommodation providers require your rent guarantor to be an Irish resident. Legal proceedings can be initiated if a guarantor fails to pay so legal jurisdiction in Ireland is important for a company offering a rent guarantor service. This is extremely challenging for international students.
What documentation must a rent guarantor provide?
Your guarantor will need to demonstrate that they’re in a financial position to pay your rent. They’ll need to provide proof of income, identification and sign a legally binding contract in order to be your guarantor.
How much does a third party rent guarantor service cost?
The short answer is that it’s expensive! Very expensive actually. Unfortunately only housing hand (based in the UK) offers a student rent guarantor in Ireland which means there is no competition. This lack of competition appears to have resulted in very high prices – lets look at an example below:
Chloe wishes to move in to a student accommodation in Ireland for 6 months (let’s say 25 weeks) – the room she likes costs €250 per week. Unfortunately, Chloe only gets paid monthly and she’s therefore not in a position to pay the student residence €6,250 (25 weeks x €250 per week). So she decides to get a quote form a student rent guarantor company in order to enable her to pay monthly – how much is this likely to cost?
Based on our research, the likely quote from a student rent guarantor service for this 25-week contract is a one-time payment of approximately €485. You might be an international student moving to Dublin and quotes like this are hard to analyze, especially when there’s very little competition in the market so you can’t shop around. Our team at Studenthouse.com is based in Dublin – we like to think we understand the market so what do we think?!?
To put it simply, we think it’s extremely expensive.
So why is €485 expensive? Well we look at this as essentially a form of finance. You’re paying a company to assume responsibility of a financial obligation on your behalf – it’s really a loan. Instead of providing an underlying asset as collateral (as you would do with a loan), you’re providing your guarantor as collateral. The guarantor company has recourse against the person who guarantees the student accommodation rental payments.
Lets get the calculator out and have a closer look.
Ok so if this is essentially a loan, then what’s the finance charge? Well the interest rate would be €485/6,250 which equals 7.76% however this is only a loan for 25 weeks so the effective APR (Annual percentage rate) for this loan would be 16.14% – now that’s expensive. To put that in context, Bank of Ireland offers student loans with an APR from just 5%.
Rent guarantors may be expensive but do you have a choice?
Yes, you do. Contact us at www.studenthouse.com to learn how we can help. We work with a large range of student accommodation providers, some of whom do not require your guarantor to be based in Ireland – instead they can be from any where in the world which makes things so much easier!
Guarantor requirements can be a little confusion so feel free to reach out to us if you have any questions or need need advice. We’re always interested to hear your thoughts so feel free to reach out at email@example.com