Is renting possible with an IVA?

When you enter into an Individual Voluntary Arrangement (IVA), it is normal to worry about what may happen to your home whether you own or rent your property.

As with most formal and informal debt solutions, you must find out whether an IVA is likely to affect your home and your assets before you agree to anything. This can give you peace of mind and help you understand exactly what to expect from the complete IVA process.

In this guide, we’ll tell you everything you need to know about renting with an IVA, including if an IVA will affect your current rental property, if you can rent a new property during an IVA, if an IVA will affect any future rental properties and, lastly, if you can get a mortgage after an IVA.

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Will an IVA affect renting a property?

In most cases, entering into an IVA will have no impact on your existing rental agreement and you should be able to continue renting your current property with no problem as long as you can afford both your rent and IVA payments.

When your Insolvency Practitioner (IP) is writing up your IVA proposal, they will take all of your monthly expenses into account, including your rent, and come up with a monthly repayment amount that you can comfortably afford. Because of this, you should never be put in a position where you can’t afford your monthly outgoings.

However, you must always check your rent agreement before entering into any debt solution on the off chance that there is a clause that states you are unable to be insolvent at any point during your tenancy.

In most cases, entering into an IVA will have no impact on your existing rental agreement!

Will my landlord be told about my IVA?

When you enter into an IVA, your landlord won’t be directly informed of your arrangement but your details will be listed on a public register known as the Individual Insolvency Register. This information can be publicly searched but is usually only viewed by creditors and credit reference agencies and shouldn’t be visible when someone searches for your name online.

Because of this, it is highly unlikely that your landlord will know about your IVA and the only way your landlord may know that you are struggling with unsecured debt is if you start falling behind on your rent payments and accruing rent arrears.

It is also worth noting that if you include current rent arrears in your IVA, your landlord will be informed and may be wary about renewing your agreement. This is why it is usually only advised to include creditors of past debts in your arrangement.

Can I rent a new property during an IVA?

It is no secret that an IVA, or any other debt solution for that matter, will have a negative impact on your credit score and this can affect your ability to be approved for a new rented property during your arrangement. However, this should only be an issue if your landlord subjects you to credit checks before signing a tenancy agreement which is rarely the case.

When you apply to rent a new property during an IVA, you should always be open and honest about your current financial situation with your prospective landlord. This will reassure them that you can make your monthly payments and are not trying to hide something from them.

If you plan to rent a new property with someone else that isn’t in an IVA or have a guarantor that is willing to help you with your application, this may boost your chances of being accepted.

Before you start the search for a new rental property during your IVA, it may also be worth asking whether you can afford the kind of expenses that come with moving such as a security and rent deposit. If you are happy to stay in your current rental agreement until your IVA comes to an end, this may make better financial sense for you in the long run.

Will an IVA affect any future rental properties?

Whilst a typical IVA term will last five years, it will stay on your credit report for a total of six years from the date it was approved. This can make it difficult to get approved for another rental property during this time.

When six years have passed and your IVA has been removed from your credit file, you may still be asked if you have a history of debt but it will generally be easier to get approved for another rental property.

After this time, you can start to rebuild your credit rating and should have no problems renting a property as long as you can prove you have been a good tenant and have never missed a monthly rent payment.

Can I get a mortgage after an IVA?

As well as renting a property, getting a mortgage is another common concern amongst people in IVAS but if you had an IVA in the past and made your monthly repayments with no problems, there is nothing stopping you from getting a mortgage.

This will, however, differ depending on your financial circumstances and what led to you getting into debt in the first place and most financial experts advise waiting until your IVA has been removed from your credit report and your credit history has improved before applying for a mortgage as this can boost your chances of being accepted.

It is also worth remembering that, even if your IVA has been removed from your credit report, most lenders will still ask questions about your financial history and whether you have been in a debt solution recently.

When this happens, you must be open and honest and explain why you found yourself in a position where you needed an IVA.

Furthermore, some people prefer to start their search for a mortgage with a specialist mortgage lender who has experience in helping people that have been in IVAs get the best mortgage deal for them.

If you are planning to apply for a mortgage when your IVA comes to an end, you must take steps to improve your poor credit rating as soon as you are financially able to do so. This could include setting a regular budget, getting a credit card with a small limit and paying it off as you go and checking your credit record from time to time and updating it with the correct information as necessary.