IVAs and Your Property

If you’re a homeowner or property owner, one of your biggest concerns might be what will happen to your home if you enter into an Individual Voluntary Arrangement (IVA).

We’re here to reassure you that an IVA is designed to help you avoid bankruptcy and protect your home – not put it at risk. Whether you own your home, rent or are a landlord, your living situation will be carefully considered before anything is agreed.

Will an IVA put my home at risk?

No – an IVA is designed to help you stay in your home while tackling debt. This applies whether you’re a homeowner, a tenant or a landlord.

How does the new equity rule work?

The IVA term and treatment of equity now depends on whether your beneficial interest in your home equals or exceeds £10,000, based on 85% of the property value calculation:

• Equity under £10,000 – a standard IVA runs for 60 months and the property is excluded from the IVA.
• Equity of £10,000 or more – the IVA runs for 72 months, again with your home excluded.

What is the property value calculation?

Before the IVA starts, your Insolvency Practitioner (IP) values your property and calculates 85% of its market value minus any secured borrowings such as mortgages and secured loans. You won’t be asked to remortgage or borrow against your property in month 54 or at any point.

In special cases, if your equity is very high or you own multiple properties, a bespoke IVA may be needed.

What if I sell my property during the IVA?

You’re free to sell – and if you choose to, you can offer the proceeds to creditors as a full and final settlement. It’s entirely your decision and there’s no obligation to sell.

Renting during an IVA

If you’re a tenant, your IVA won’t normally affect your rental agreement unless your tenancy explicitly prevents IVA participation (which is rare). Future landlords may carry out a credit check, so it’s worth being upfront during application stages.

Landlords with buy-to-let properties

You can enter an IVA even if you own multiple rental properties. You’ll need to provide a 12-month cashflow for each one and show that they’re generating sustainable income. Your properties are usually protected, as selling them could be more costly and disruptive than continuing the IVA.

In summary

• The £10,000 equity rule means only significant equity needs to be considered.
• IVAs are flexible and designed to suit your situation, whether you own one property, rent or have multiple properties.

For tailored advice about your home and debt options, speak to one of our friendly advisors today. Call us free on 0800 316 1833, start a Live Chat or connect via WhatsApp. We’re here to help you move forward with confidence.