www.iva.co.uk

Dear Forum

I have never heard of an IVA until today and wanted your genuine advice please:

I am looking to move to another country for 12 months to be with a girl I have fallen in love with. That is the good bit! [:D] However, this credit crunch situation has thrown up countless obstacles to my move, primarily being unable to sell my house, so I have opted to rent it out for 12 months and then either we will both return to live in it or I will continue to rent it out until the market lifts and I can sell it at a suitable price.

I was delighted when a couple viewed the house via my letting agent this week and have put in a reference application. The lady in the couple volunteered to the letting agent the information that she has an IVA and the letting agent has now sent off the reference application and is awaiting its review.

Should the reference be approved regardless of her having an IVA, my question is should I accept a tenant with an IVA or hold out for one without as it is “too risky”? Based on my total ignorance of IVAs I am unclear whether her having one could result in her not paying me my rent and leaving me with little recourse to claim/evict OR whether the fact she has one actually paradoxically is a good thing – as she must (from what I have read on these boards) have a structured financial plan in her life?

From what I have read here, other tenants with IVAs have either had to find a guarantor OR pay 6 months in advance, both of which I think I would accept if need be. Should however they not pay, does the IVA offer her/them any additional protection to prevent me claiming my rent owed and/or evicting?

Please don’t think me callous in my words as I do understand that we can all but for the wrong circumstances find ourselves in dire straits and need the recourse of something like an IVA - I myself am not exactly flush. And it is because of this I must be prudent and ensure I am making the right decision for me and my financial responsibilities.

Thank you for your replies in advance and I eagerly await your thoughts on this matter.

Hey wkdfrog, congratulations on falling in love, how exciting!

This is my personal opinion, people who are in IVAs are very reliable because the rent amount is taken into account in their income and expenditure. Therefore, they have the money to pay it. You could always ask for a letter from their insolvency practitioner to say that they are up to date with their IVA payments.

Hi - the short answer is 'yes'.

Think of it this way...someone in an IVA has acknowledged they have a debt problem and have gone through a lengthy process to get there. They have a strict monhly budget which they have to stick to. They can show you a breakdown of their income and expenditure and prove how much they have available for the rent.

Someone not in an IVA with 5 credit cards, loans and store cards will have an excellent credit rating no doubt..but for how long?? Are they robbing Peter to pay Paul and living off that overdraft month on month.

So` - which one really is the greater risk?? Someone who lives to a budget and knows exactly what is avaialable to them or someone living ~off credit who might find it goes horribly wrong very soon.

A credit score isn't a clear and true picture of someone's ability to pay rent in my honest opinion.

What a good question.

Whilst an IP couldn't guarantee the rent payment being made of course it certainly does have to fit within their budget, it is also unlikely that the renters are looking to significantly increase their rent, so it must logically follow that they are capable of paying their existing rent and have almost certainly done so. A reference from their current landlord to confirm that may be a good idea for you.

In all honesty the decision of whether you rent to these people or not is one that only you can make, but I would certainly say that some good points have already been raised by the other posters previously.

Regards.

Thank you for your replies so far, much appreciated.

I have just had a call from the letting agent saying that the reference check has passed! They did not specify how long the IVA had been in place or the circumstances, but with the pass I am now inclined to accept their tenancy request.

Quick question - does anyone have any experience or know where i can seek good free sound legal advice as to what my protections are SHOULD there be a problem and them not pay the rent/want to leave?!!

Thanks in advance (I must say you are a very speedy helpful bunch on here)! [:D]

Hi

I think that fact that you have asked this question and researched this is brilliant! So many people/companies just hear IVA and assume the worse and don't give people a chance to rebuild their lives when they havent even got all the facts......So well done for looking into it and i can prabaly safely say that if you do accept this offer then you will be giving a ray of hope to this person who has faced up to their debts!

I personnaly know that i would never get myself in the situation i was in before getting into debt and going through the stressful time of an IVA process is a hard lesson learnt and i am sure that i can speak for many people in that i swear by almighty god that i will never get myself in that situaion again and i would like to think that the person in quesion would think the same.

I hope this helps

xx

I agree with Sarah. These people are doing there best to sort out there debts and doubt vey much they would risk anything by not paying your due rent.

Knowing all about IVA's now I would quite happily rent out a proerty to someone who is in one or Bankrupt, we sometines need that kind of life line.


The only thing i would do to be sure is ask for a letter off there IP to confirm they are up to date.

Whatever you decide im sure it will be the right one.

There are, I believe, rent guarantee insurance policies out there for Landlords. Perhaps you could check those out?

Hi there and welcome to the forum. Glad to hear that things are going well for you in your private life at least!

As an insolvency practitioner, and also the owner of several investment properties let out to members of the public, I would say that anyone who is in an IVA would represent a very good covenant for you.

For a start they have no debts - just an agreement in place which is supervised by a qualified professional, and secondly they will have learned to treat their housing costs as an absolute priority.

Hope this helps.