June 28, 2023

Renting with an IVA – What Landlords Need to Know

Can you rent a property with an IVA?

As a landlord, you may come across potential tenants who are currently subject to an Individual Voluntary Arrangement (IVA). This can raise questions about whether it is possible to rent to someone in such a financial situation. Here we will explore what it means for you, and attempt to answer the question “Can you rent a property with an IVA?”

What is an IVA?

An Individual Voluntary Arrangement is a legally binding agreement between an individual and their creditors, aiming to repay debts over a set period of time. It is a formal debt solution that allows the debtor to make affordable monthly payments based on their income and expenditure.

An IVA can provide individuals with the opportunity to regain control of their finances and work towards becoming debt free.

Is it possible to rent a property to a tenant with an IVA?

The short answer to this question is yes, it is possible to rent to a tenant who has an IVA. But this is a decision that ultimately rests with you, the landlord.

If the IVA is arranged whilst the tenant already has a rental agreement in place with you, then you may not even discover that your tenant has become subject to an IVA. This shouldn’t really be a problem, especially as the IVA is calculated to ensure that the tenant can afford his or her necessary outgoings, which include rent.

If a potential new tenant already has an IVA in place and is looking to rent your property, then you will most probably find out about the IVA if you conduct credit checks. This may raise concerns about whether you should go ahead with the rental. 

Can you rent a property with an IVA?

If you discover that your potential tenant already has an IVA in place, you don’t have to panic or immediately refuse rental to the tenant. Here are some things to bear in mind to ensure a smooth and mutually beneficial tenancy:

Communicate openly with your potential tenant to understand their financial situation better and how they plan to manage their rental payments. This will help you assess their commitment and ability to meet their obligations.

Conduct thorough reference checks. These will help you understand employment verification and previous landlord references, and gain a bigger picture as to their reliability as a tenant.

If you have reservations about renting to a tenant with an IVA, you could consider asking for a guarantor, or requesting an additional form of security such as a higher deposit or advance rental payments.

Seek professional advice from an accountant, solicitor or debt advisor who can guide you through the process and provide legal and financial advice. Familiarise yourself with the relevant legislation and regulations relating to tenants with an IVA which will help you to navigate the renting process legally and ethically.

Should you rent to a tenant with an IVA?

We’ve looked at the question “Can you rent a property with an IVA?” and agreed that yes, it is possible to rent to a tenant with an IVA. Ultimately, the decision to rent to a tenant with an IVA is a personal one. Some landlords may choose to do so, while others may prefer to avoid the situation altogether, some landlords may feel it is their only option. It is essential to weigh up the pros and cons and consider the individual circumstances before making a decision.

An alternative way to ensure that you will be paid a regular rental fee each month is to let via a guaranteed rent scheme.

With a guaranteed rent scheme, you are paid an agreed rental income for a set period. As part of the deal, the entire rental process is looked after on your behalf. This includes sourcing tenants, carrying out tenant referencing, collecting rent, dealing with legal and administrative paperwork, liaising with the tenants and undertaking any necessary repairs or maintenance to your property. All with nothing to pay on your part.

Rental payments continue to be made even during void periods, or where the tenants are not paying their rent.

The guaranteed rent scheme offered by City Borough Housing is backed by an exclusive service promise and comprehensive professional property management. This means that everyday repairs as well as quarterly property inspections will all be included, along with a promise that your property will be returned to you at the end of the agreement in its pre-let condition, allowing for fair wear and tear.

To discover more about how a guaranteed rent scheme could benefit you as a landlord, please do get in touch with our helpful team. We’d be happy to give you a free rental valuation too.

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