Source: https://imobireport.com.br/ - By: Caio Belazzi
Risk management in guaranteed leasing: why are guarantors failing real estate agents?
In recent years, the rental market has grown, become more sophisticated and increasingly complex. Demand has skyrocketed, defaults have become more complex and the role of guarantors - who are supposed to protect real estate agents and landlords - has been widely questioned.
I grew up in a town in the interior of São Paulo with only 45,000 inhabitants. I remember it well: there, all the real estate agents paid the rent to the landlord, even if the tenant was late. It was simple. The risk was local, predictable and, in a way, personal. Today, this scenario has changed radically.
Rental guarantees are no longer just a commitment between real estate agents and landlords. They have become financial products, sold with the promise of total protection - but which, in practice, don't always deliver what they promise.
In this article, I analyze how the transformation of the rental market has exposed the weaknesses of current guarantee models. We'll explore the data, risk behavior and understand why so many guarantors are failing - and what this means for the real estate agents who depend on them.
Rent growth: the basis of the new risk
Over the last two decades, the residential rental market has undergone a silent but profound transformation. In 2000, renting accounted for only 14.22% of occupied households in Brazil. There were around 6.4 million rented homes, according to data from the IBGE Census.
Since then, the proportion of rented properties has grown significantly and at a faster rate than the total number of households in the country. Between 2000 and 2010, while the number of Brazilian households grew at a compound rate of 2.23% per year, rented homes grew at a compound rate of 5.07%. Between 2010 and 2022, households grew by 2.50% per year, while rented households grew by 3.63% (based on the Compound Annual Growth Rate metric).
The cumulative effect of this growth is significant. According to the 2022 Census, Brazil surpassed the mark of 16 million rented households. Considering the entire period from 2000 to 2022, renting advanced at a continuous growth rate of 4.19% per year.
This quantitative advance is not just a statistic - it structurally alters the nature of risk in the sector. The greater the number of contracts, the greater the exposure to factors such as families' financial behavior, informality, economic instability and new work dynamics. Renting has gone from being a marginal arrangement to occupying a central position in Brazilians' housing structure. As a result, the risk of default has become more recurrent, more varied and, above all, more complex.
Change in risk profile
The growth of the rental market, rapid changes in the job market and the popularization of new forms of guarantee have drastically changed the risk profile of renting over the last 20 years. Renting a property has always involved risks - mainly default and damage to property - and this remains true. What has changed is the nature of these risks.
Insurers and guarantors have helped democratize access to housing, which is extremely positive. However, the risk profile has evolved faster than the ability of traditional analysis tools to adapt. As a result, many guarantors, insurers and even real estate agents face operational imbalances that have led to recurring losses.
One of the central factors in this transformation is access to credit in Brazil. Historically, the country has always had low credit penetration, especially among individuals. This reality, however, has changed significantly over the last two decades. According to data from the Central Bank, compiled by the National Association of Credit Bureaus, the ratio between credit and GDP was 25% in 2005. By December 2024, this ratio had jumped to 54.4%.
Another important factor is informality. Despite advances in qualifications and average income, around 40 million Brazilians still work in informal conditions, which represents 42.1% of the employed population, according to a study by IPEA.
These variables - expanding credit, persistent informality and unstable income dynamics - require new approaches to risk management. A cursory analysis of credit records is no longer enough.
What guarantors and insurers promised (and didn't deliver)
The discontinuation of QuintoCred in the guarantee market has reignited the debate about the responsibility of guarantors and their risk management capacity. Real estate agents, landlords and tenants across the country were affected by the decision. But this was not an isolated case. There have been several public reports of guarantors failing to meet their commitments to real estate agents.
In an article in UOL, written by Mariana Barbosa (04/06/2025), several guarantors are cited for facing serious problems of default and breach of contract. A simple search on Reclame Aqui or judicial systems reveals complaints and lawsuits filed by real estate agents for non-payment.
One case that I personally investigated (case no. 1008516-06.2024.8.26.0566) reports a loss of approximately R$ 400,000 caused by a guarantor who failed to honor financial commitments. In addition, important insurers have also closed their operations in the surety market, leaving the sector even more exposed to uncertainty.
What these companies promised - and didn't deliver - was, in essence, solid risk management. The biggest failure was to treat risk management as a one-off process, restricted to credit analysis on entry. That's only the first step - and the most trivial. Proper management requires monthly monitoring of the portfolio, risk reclassification based on behavior and, above all, projecting expected and unexpected losses.
This type of approach is provided for in the IFRS 9 accounting standard, adopted internationally after the 2008 crisis and now a mandatory reference for financial institutions. Guarantors should consider it bedside reading.
Another symptom of poor management is the unrealistic prices charged by some guarantors in order to gain market share. Risk management requires a balance between pricing and losses. The price needs to be sufficient to cover the expected losses - and still generate a margin. Artificially low pricing may attract business in the short term, but inevitably collapses in the long term.
Finally, it is unacceptable for companies operating at this level of risk not to have real technical reserves, in cash, to deal with unexpected variations in default. Without these reserves, the operation becomes unsustainable.
Conclusion: how real estate agents should protect themselves
Faced with so many risks and failures, my recommendation to real estate agents is clear: be careful when choosing guarantee and insurance partners. A few simple actions can help avoid major problems:
- Check Reclame Aqui for recurring complaints about non-payment. Recurrence is a sign of poor risk management.
- Check the court systems for lawsuits filed by real estate agents against guarantors. Read the content to understand the seriousness.
- Ask about the technical reserves. Ask about the volume actually contributed and the liquidity available in the event of a higher than expected default.
- Be wary of very low rates. A price that is out of touch with reality usually indicates a lack of technical analysis - and a risk of future bankruptcy.
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