The Different Types of Guarantees for Rental Properties

When renting a property, there are several types of guarantees designed to protect both the landlord and the tenant. These guarantees are essential to ensure the proper execution of the lease agreement and to prevent potential disputes. Here is a detailed overview of the main types of guarantees available and the online services that facilitate these processes.

The Joint and Several Guarantee (Caution Solidaire)

The joint and several guarantee is one of the most common forms of security. It involves a third party, often a relative of the tenant, committing to pay rental debts in the event of the tenant's default. This guarantee provides additional security for the landlord, as it ensures that rent and charges will be covered even if the tenant encounters financial difficulties. The guarantee must be formalised through a written document, known as the deed of suretyship, specifying the guarantor's obligations. This deed must state the amount of rent and charges, the conditions of the guarantee, and the duration of the guarantor's commitment.

The joint and several guarantee is particularly useful when the tenant is a student or a young worker without stable income. In these situations, the presence of a guarantor reassures the landlord about the tenant's ability to meet their financial commitments. In the event of a dispute, the landlord can turn directly to the guarantor to obtain payment of unpaid rent or any repair costs.

The Visale Guarantee

The Visale guarantee (Visa pour le Logement et l'Emploi) is a free scheme offered by Action Logement. It is primarily aimed at young people under 30 and workers in precarious employment. Visale acts as guarantor for the tenant by covering unpaid rent for a period of up to 36 months. This guarantee is particularly attractive for tenants who struggle to find a joint and several guarantor. The Visale application must be submitted before the lease is signed and requires prior approval from Action Logement.

Visale represents a modern and effective solution for facilitating access to housing for young people and workers in precarious situations. In the event of non-payment, Action Logement covers the rent and then pursues the tenant to recover the amounts advanced. This mechanism helps to secure landlords while supporting tenants in difficulty.

Unpaid Rent Insurance (GLI)

Unpaid rent insurance is taken out by the landlord with an insurance company. It guarantees the payment of rent in the event of the tenant's default. In addition to covering unpaid rent, this insurance may include coverage for legal costs in the event of a dispute and for damage caused by the tenant. Unpaid rent insurance represents a cost for the landlord but provides considerable security. It is particularly suited to landlords wishing to minimise the financial risks associated with letting their property.

This insurance is often seen as a comprehensive solution, as it covers not only unpaid rent but also the legal costs associated with potential eviction proceedings. Moreover, some insurance policies include coverage for damage caused by the tenant, thereby ensuring the property is maintained in good condition.

The Rental Risk Guarantee (GRL)

The rental risk guarantee, although less common, is another form of coverage for unpaid rent. It is generally intended for tenants who have difficulty providing sufficient guarantees. The GRL is taken out by the landlord and may be partially funded by public subsidies. It covers not only unpaid rent but also the costs of restoring the property in the event of damage.

The GRL is an attractive solution for landlords who wish to secure their property investment while giving a chance to tenants with a weaker application. It contributes to social diversity by facilitating access to housing for a variety of tenant profiles.

Guarantees Offered by Online Platforms

With the rise of digital technology, many online platforms offer innovative solutions for securing rental agreements. These services act as guarantor for the tenant, thereby simplifying the housing search for those who do not have a joint and several guarantor. They assess the tenant's creditworthiness and provide a guarantee to the landlord, covering unpaid rent and potential damage. Among the main players in this market are:

• Garantme: Offers a comprehensive rental guarantee for students, young professionals and expatriates. Garantme provides a rapid creditworthiness assessment for tenants and issues a guarantee certificate accepted by many landlords and estate agencies. This service allows tenants to present a strong application, even without a family guarantor.

• Luko: Offers similar services with guarantee solutions for unpaid rent and insurance for landlords. Luko stands out with a flexible offering adapted to different tenant profiles, including those on fixed-term contracts or freelancers. The service covers unpaid rent and property restoration costs, providing peace of mind to landlords.

• Visale: Mentioned previously, offers a free guarantee backed by the State. In addition to its primary function, Visale also provides support to tenants to help them find solutions in the event of financial difficulty.

• Cautioneo: Provides rental guarantees to facilitate access to housing. Cautioneo is particularly aimed at tenants without a guarantor and expatriates, offering them tailored guarantees and support services to compile their rental application.

These platforms provide a modern response to the security needs of landlords while helping tenants gain easier access to rental housing. They help to streamline the rental market by offering quick and reliable solutions for both parties.

Legal Aspect: Combining Guarantees

It is important to note that in France, combining guarantees is not permitted. Under Article 22-1 of Law No. 89-462 of 6 July 1989, a landlord cannot require both a joint and several guarantee and unpaid rent insurance, unless the tenant is a student or apprentice who does not receive a grant. This provision aims to protect tenants from excessive financial demands and to maintain a balance in the landlord-tenant relationship.

In practice, this means the landlord must choose between requiring a joint and several guarantee or taking out unpaid rent insurance. However, the Visale guarantee may be combined with unpaid rent insurance, as it is considered a free aid scheme rather than private insurance.

Failure to comply with this rule may result in penalties for the landlord, including the cancellation of the additional guarantee imposed illegally. It is therefore crucial for landlords to fully understand these regulations in order to structure their guarantee requirements in a lawful and ethical manner.

Conclusion

The choice of the appropriate guarantee depends on the specific situation of each tenant and landlord. A thorough understanding of the different options helps to secure the tenancy relationship and prevent conflicts. Whether through a joint and several guarantee, unpaid rent insurance, services such as Garantme, or other schemes, guarantees play a crucial role in ensuring the peace of mind and security of property transactions. Complying with the legal provisions regarding the combination of guarantees is essential for maintaining trusting and fair relationships between the parties involved.

In summary, each type of guarantee has its advantages and disadvantages, and the choice often depends on the specific circumstances of the rental. Landlords must carefully evaluate the available options and choose the solution that offers the best balance between security and accessibility for their tenants. Tenants, for their part, should research the available guarantees and prepare a strong application to maximise their chances of finding a property. The development of online services and public support schemes now offers flexible solutions tailored to the needs of all rental market participants.