IVAs and Renting
One of the main concerns for anyone entering an IVA is what will happen to their home – whether they own their home or whether it’s a rented property. You will find answers to the most common questions we get asked whether people can rent a property during an IVA below.
Will an IVA affect my current rent contract?
An IVA shouldn’t affect your current rent contract but we recommend you check your contract just in case there is a clause to say you can’t be insolvent while residing at that address. Your landlord won’t be told about your agreement however and the property won’t be considered as part of the IVA.
Your IVA shouldn’t affect your current living situation – when you draw up your income and expenditure to determine how much you can afford to pay to your creditors you will be able to budget for your rent payments. If you have fallen behind with your rent payments and have accrued arrears you will be able to put money aside in your budget to pay back these arrears, separately to your IVA.
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Can I move to another rented property whilst in an IVA?
Your credit rating will be impacted during an IVA. This means if your prospective landlord requires you to have credit checks before signing a rental agreement then you might struggle to rent another property during your IVA. This may also be the case in renewing a letting agreement – if you have to go through the credit check process again during a renewal your landlord might raise his concerns.
Renting during an IVA might not be an issue however if you are renting with another person or if you could get a guarantor to assist with your application. Be upfront with your landlord or letting agent when applying for a property and they might be more willing to help.
You will also need to consider whether you can afford to move properties whilst in an IVA. Ordinarily you will need to save up for the rent deposit and you will need to pay the first month’s rent up front alongside it. You may be able to save a small amount of money each month while in your IVA but if you do need to move, usually you will need to raise the deposit quickly. In this case you might be able to discuss a payment break. This will depend on the terms of your IVA and whether you have had payment breaks before but you should discuss this possibility with your IP.
If you need to move, consider whether you have a deposit to be returned from your current home – the only problem with relying on this is you might not get the funds back until you have handed in your keys and moved out of the property. If your home isn’t in the condition it was when you moved in, you should also have to take into consideration landlord deductions from your deposit.
Will an IVA prevent me renting a home in future?
An IVA will affect your credit rating for at least six years so during this period you might find it difficult to rent a home. Your IVA will be removed from your credit reference file six years from the date your IVA was approved or in the event your IVA takes longer than six years, once it has completed. You can then start to rebuild your credit rating and you shouldn’t have any further problems renting a home.
*In the case of a one-off lump sum settlement