Renting a council house or housing association property should not be a problem if you’re in an IVA. There should be no concerns as long as you keep your rent up to date. Moving to a new council property is also an option.
Included in this article:
- How is your council house affected by an IVA?
- Are council rent arrears included the agreement?
- Can you move into a council property during an IVA?
- Can you buy your council house after an IVA?
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How is your council house affected by an IVA?
You can have an IVA if you are renting a council house or housing association property.
The council will not be contacted or told about the Arrangement. It is therefore very unlikely that they would ever find out. If they ever did, they will not have any problem.
All the council are concerned about is that you keep your rent up to date and pay on time. Once your IVA is in place, it should actually make it easier to do this as the pressure of paying your debts will be taken away.
You must include a sufficient allowance to pay your rent in your living expenses budget. Once your IVA has started, this will mean you should always have enough money to pay your rent on time.
Are council rent arrears included in an IVA?
Rent arrears owed to the council or housing association can’t usually be included in an IVA. They are a priority debt and if not paid, there is a risk you could face eviction.
You will therefore need to set up a separate payment agreement directly with the council to clear any arrears outstanding. This can run alongside your IVA which deals with your other creditors.
When negotiating a payment plan with the council, remember that you will also need sufficient money left over to pay your IVA.
Where you have rent arrears to pay, you may only be able to afford to make a relatively low IVA payment to start with. However, once they are paid, the extra money you were paying the council will then be added to the Arrangement.
Arrears from a previous council house can be included in an IVA as there is no risk you will be evicted from a property where you no longer live.
Can you move into a council property during an IVA?
There should be no reason why you can’t move into a council house while you are in an IVA.
You will not face the same barriers as if you were trying to move to a rented property owned by a private landlord. This is because the council are not be concerned about your poor credit rating. If you qualify, the fact that your credit score is poor will not stop you. In fact, the council or housing association will probably not even credit check you.
It does not matter whether you are moving into a council property for the first time or you are relocating from a smaller to larger property. The fact you are in an IVA will not stop you from moving.
The main thing you will need to be concerned about is paying for moving costs or any decorating that is required in the property. Given you’re in an IVA, you are unlikely to have any spare funds to pay for these type of things.
Can you buy your council house after an IVA?
Being in an IVA should not affect your chances of buying your council house in the future should you have the option.
That said, doing this will not be possible until after the Arrangement is finished. Not only must you have completed your IVA, but also (and most importantly), the record must have off your credit file.
The IVA record will drop off your file automatically 6 years after the start date.
It is vital that you wait for this to happen before looking at buying your property. The reason is that if the record remains on your file (even if after have your completion certificate), it will impossible to get a right to buy mortgage. Lenders who provide this type of mortgage require your credit file to be clear.
If you are looking to by your council property and are in an IVA (or have recently completed one), give us a call for advice. We can introduce you to a mortgage broker who can help.
Need more advice about renting from the council or housing association during an IVA? Call us (0800 011 4712) or complete the form below. Its free and confidential.