Move Home during an IVA

12/09/2023
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Move Home during an IVA

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.

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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.

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14 thoughts on “Move Home during an IVA”

    John says:
    08/09/2020 at 17:43

    Hi. My home is up for sale and I have an Iva, will the Iva automatically take the money from the house or do I sort that with them once I receive the money?

    Reply
      James Falla says:
      08/09/2020 at 17:46

      Hi John

      I strongly recommend that you discuss your house sale with your IVA company before proceeding with the sale. You need to agree in writing with your IP what will happen to the proceeds of the sale. If you are not happy with the agreement then you should suspend the sale until after your IVA is completed and you have your completion certificate.

      Generally speaking, if you sell during an IVA, any money raised is treated as a windfall. In other words, 100% of the funds released would have to be paid to your IVA company. They can then take out 100% of the original debt you owed (less the payments you have already made) PLUS all their costs and fees PLUS interest charged at 8% pa on the total debt from the start date of the IVA.

      Only after all of these have been paid would any balance be returned to you. As such it could end up costing you £1000s

      The only way to protect yourself is get a written agreement up front with your IVA company that they will take certain pre agreed amount to settle your IVA and that you can keep the rest.

      Reply
    Celle says:
    29/03/2021 at 14:24

    My niece’s husband has an IVA on their property however they have now split up and he’s living with another woman and his new baby. She has to pay the mortgage as he doesnt but feels trapped as she can’t move. How is this fair? Is there anything she can do?

    Reply
      James Falla says:
      29/03/2021 at 14:35

      Hi Celle

      This does not seem a very fair situation, but it is all too common when couples split. If your niece wants to protect her share of the value of the property, she will have to continue paying the mortgage. If she doesn’t, it will be at risk of repossession.

      That said, there is nothing to stop her selling the property if she wants (although her ex will probably have to agree and sign various paperwork). After the sale, her share of any equity released is protected. It remains hers to keep and she can do what she likes with it. His share would have to be paid into his IVA as a windfall.

      Note: Her ex’s IVA company will probably have taken out a restriction on the property. This simply means it can’t be sold without their approval. However it does not prevent a sale. It is just that her solicitor will have to communicate with the IVA company to ensure her ex’s share of any equity is paid to them.

      Reply
    Lindseyd says:
    28/05/2021 at 17:39

    Hi there, I’m hoping to move to a new rental home however its more expensive than the rent I currently pay. Is this going to cause an issue with my iva?

    Reply
      James Falla says:
      28/05/2021 at 17:50

      Hi Lindseyd

      If you are able to continue paying your current IVA payments by making savings elsewhere in your budget to compensate, then there should be no problem. However, if the rent increase means that you will struggle to maintain your payments, there may be an issue.

      Where this is the case, you might be able to speak to your IVA company about a possible reduction. If the move was unavoidable, they might be able to help. However, any reduction would normally go hand in hand with an extension of the number of your payments.

      Reply
    Suzanne J says:
    15/07/2021 at 11:48

    Can the IP stop me from saving for a deposit to move if my move is unavoidable?

    Reply
      James Falla says:
      15/07/2021 at 11:55

      Hi Suzanne

      There is nothing to stop you saving while you are in an IVA for whatever reason as long as the money you save comes from your agreed living expenses budget. If you plan to save from extra earnings such as overtime or a bonus, you must discuss this with your IVA company first. As standard they would require around 50% of these extras to be paid into your IVA.

      If the only way for you to save is to reduce or stop your IVA payments, then of course you will need to clear this with your IVA company first. They may be willing to help you particularly if the move is unavoidable.

      Reply
    Craig C says:
    26/08/2021 at 13:34

    I am a House owner, the only thing myself and my wife have in our lives we are living in a Miserable Situation and want to sell our house and pay remaining mortgage balance and purchase a small house and pay off existing debts. I have read your info on this but it says I can’t till IVA is over.

    Reply
      James Falla says:
      26/08/2021 at 13:47

      Hi Craig

      You have slightly mis understood the information in the above artice. To clarify, you ARE allowed to sell your property during an IVA. However, you need to be aware of what happens if you do this….

      As standard any and all equity released from the sale would have to be handed to your IVA company. This is because it would be classed as a windfall. They are allowed to take up to 100% of the original debt included i your IVA (less any payments you have made into the Arrangement) + all their fees and costs + interest on the debt at 8% pa from the start date of the IVA. Only after all of that has been paid will they return any remaining funds to you.

      As you can see, this could work out very expensive and you might not have as much cash after the sale to buy a new property as you thought.

      One possible way around this is to make a deal with your IVA company up front. Tell them that you might be willing to sell your house in order to settle your IVA early. Ask them to confirm the amount they will require from the sale if you decide to do this. Make sure you get this in writing! It is possible that going about it this way, they would accept a smaller amount then if you just sold the property. You can then make a decision on what you want to do.

      So, my advice is speak to your IVA company first and establish the amount they will take if the house is sold. You can then make a decision whether or not to go ahead with the sale based on the full knowledge of what you will have to hand over and what you will be left with. If what you will be left with is sufficient to buy a new property without having to get a mortgage, then there should be no problem.

      Reply

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