Move Home during an IVA - Expert Advice

You are allowed to move home during an IVA. However if possible it is often better to do so before starting the Arrangement or waiting until it is over.

Included in this article:

Can you move home during an IVA
Moving to a new rented property
Selling a property you own
Renting your house out during an IVA

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Can you Move Home during an IVA?

Legally speaking there is nothing to stop you moving during an IVA. However the process is not straight forward. There are a number of issues you will need to consider whether you are a home owner or renting.

Firstly your poor credit rating will make any move difficult. It will affect your ability to buy a new property or find a one to rent.

In addition you must consider your living expenses budget. If any of your expenses increase as a result of moving it will affect your ability to maintain your IVA payments.

If at all possible it is almost always easier to move home either before you start your IVA or wait until after the Arrangement is completed.

Moving to a new Rented Property during an IVA

Moving to a new rented property during an IVA is possible. However you will face a significant challenge because your credit rating is poor. This will mean that you will fail most letting agency credit checks.

There are potentially some ways round this.

First, if you are planning to live with someone else, if possible they should take the tenancy in their name alone. You can be a named occupier only. This will mean that only they have to pass the credit check.

Second, you could offer to pay 6 month rent in advance. However you may struggle to access sufficient funds if you are in an IVA.

Third, you could offer a third party who will act as a guarantor for the rent payments. Some letting agents will be happy with this, other not.

In addition to everything else, you must also take into consideration whether your new rent payment will fit into your living expenses budget. If it will mean your overall expenditure is going to increase, you will then struggle to maintain your IVA payments.

Struggling to get your head round all of this? We can help. Give us a call (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

Selling your Property while in an IVA

If you are a home owner it is unlikely that you will be able to sell your property and buy another one during your IVA. Firstly you will not be able to use any equity released from the sale as a deposit for your next home.

Any equity raised will be treated as a windfall. In other words it will have to be paid into the Arrangement to increase the amount paid back to your creditors. It will not be available to help you by another property.

The next problem will be getting a mortgage. It is unlikely that you will be able to do this during your IVA for any other reason than to settle your Arrangement early.

If you are a home owner and need to move during your IVA your best option might be move to rent out your property to someone else and move into rented accommodation yourself.

Renting your House Out during an IVA

You may have no choice but to move home during your IVA. In these circumstances if you are a home owner the best option may be to rent out your property and then start renting yourself.

This will still present significant challenges. You will need to ensure the rent you charge for your property covers the mortgage payments. In addition the costs you incur due to renting must not increase your living expenses too much thus making your IVA payments unafordable.

Before making any decision to move you must discuss the situation with your IVA Company. If you have no choice and your expenses are likely to rise they may be able to help by reducing the payments you make into your Arrangement.

Before renting out your property you must inform your mortgage lender. They will normally require you to apply for a Consent to Lease.

Need more advice about moving home during an IVA? Give us a call (0800 011 4712) or complete the form at the bottom of this page. Its free and confidential.

14 thoughts on “Move Home during an IVA”

Louisec says:

27/10/2021 at 11:14

Hi I have In principal had an offer on my home and the Mortgage lenders condition is that the IVA is settled. Does this mean that I will no longer have to make the monthly IVA payments?

James Falla says:

27/10/2021 at 11:33

Hi Louise

What you have been told by the mortgage lender is correct. No lender will give you a mortgage if you have an outstanding IVA….. That said, you need to understand how selling your house during an IVA works and act very carefully.

Your IVA agreement (which you signed) will have a windfall clause. This means that if you have no prior agreement stating otherwise, any equity you release from the sale of your home must first be paid to your IVA company. From this money they can then deduct 100% of the debt you originally owed (less the payments already made) plus their fees and costs (and in some instances interest). Any funds left over are then returned to you.

The only way to avoid this large sum being taken, is to have a prior agreement with your IVA company stating how much in total they can take to settle the IVA if you sell. You must be happy with this and get it in writing BEFORE YOU SELL. Once this agreement is in place, you can then be comfortable once your sell that the IVA will be completely over and your will have no more ongoing monthly payments. You will be able to show the agreement to your new mortgage lender to overcome any concerns they have that the IVA will be settled as part of the deal.

But beware, you will not have as much equity to put down as a deposit for your new property because some of it will have to be used to settle your IVA.

Carol J says:

22/02/2023 at 12:15

Hi
I’m contacting you on behalf of my daughter. She has an IVA living in a rented property that is £825 a month. My friend has offered their home to my daughter for £950 pm, I’ve checked all her figures and I know she can afford it, but with her having an IVA, can they stop her from doing this? My friend is aware of the IVA and are ok with this
Thanks for your help

22/02/2023 at 12:26

Hi Carol

Ultimately, your daughter’s IVA company can’t stop her from moving.

However, the problem I can foresee is the rent payment for the new property will be £125/mth more than the old. On paper this will mean a reduction of her surplus income by £125/mth.

First and foremost, can she sustain the higher rent payment together with her agreed IVA payment? If she will struggle, her IVA company is unlikely to be happy with the move if she will then be asking for a reduction in her payment.

If you believe she can sustain both the rent increase and her agreed IVA payment, it should be OK.

Her IVA company are likely to ask if her rent will change when she moves and will need to understand how her IVA payments will remain sustainable. She needs to be ready with that info if asked.

I hope this helps