For NYC renters who don’t have a parent or well-to-do friend who can guarantor their apartment, getting on a lease can be a challenge. In addition to wanting a credit score of at least 700 and looking at bank statements, landlords usually want to see that a prospective tenant’s annual income is 40 times greater than one month’s rent. If that’s not the case, their guarantor must earn a whopping 80 times the monthly rent. Aware of this hardship in a country where rents have risen 20 percent over the last five years, a new financial startup hopes to help clear these hurdles. As noted by the Wall Street Journal, TheGuarantors sells payment insurance to tenants, which gives landlords a guarantee that they’ll still be paid if the tenant fails to meet rent.
TheGuarantors was founded in 2014 by Julien Bonneville, who struggled to find an apartment when he moved to the city in 2010 to attend Columbia. Partnering with $5 billion insurance company the Hanover Insurance Group, they’ll work with tenants who earn as little as 27 times the monthly rent and have a credit score as low as 630, taking into account savings, other liquid assets, and income from outside the country. “Depending on how risky the applicant is,” the premium can be two week to roughly a month’s rent a year.
In New York, where “rent growth has far outstripped income gains in recent years,” the startup is catching on. According to Cliff Finn, executive vice president of new development at Douglas Elliman, 10 to 30 percent of tenants in buildings he’s currently leasing have insurance through TheGuarantors. And some of the biggest complexes in the city, such as Stuyvesant Town and Gotham West, have already said they’ll accept the insurance. Bonneville says he has about 300 buildings signed up.
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