Can I Sell my House if I Have an IVA?

Any form of money troubles can be stressful, especially when the debts may lead to concerns over whether you’ll be able to keep your home or even sell it. An IVA is a common path people take to tackle debt, and, thankfully, it offers those struggling with their finances a bit of a safety net. Where bankruptcy can often make it difficult to sell a house, an IVA is less restrictive, and since the introduction of the IVA Protocol 2025, things have changed a little.

• You can still sell your house if you have an IVA
• You will need the approval of your Insolvency Practitioner
• Proceeds of the sale can go towards clearing the debt
• Where equity in the property is low, sale proceeds may not go towards the debt
• The terms of your IVA will be determined by how much equity you have in your property

In this blog, we dive a little deeper into IVAs to learn how they can affect the sale of your house.

What is an IVA?

An IVA, also known as an Individual Voluntary Agreement, is a legally binding agreement between you and those you owe money to. The IVA puts all your debts into one monthly payment, repaying your creditors what you can realistically afford. Once the term of the IVA has ended (normally five years), any outstanding debt is written off.

IVAs are commonly used for debts accrued with, but not limited to:

• Credit cards
• Personal loans
• Unpaid utility bills
• Bank overdrafts

They can only be set up with a licensed debt professional who acts on your behalf to negotiate with creditors and set up how the payments will be distributed. This Insolvency Practitioner (IP) then becomes your first port of call, rather than the creditors themselves.

Selling my house while in an IVA, what options do I have?

This depends on whether your IVA started before or after the 2025 protocol. Whilst you can sell your property regardless of what type of IVA you have (subject to the IP approval), how the proceeds are managed varies considerably.

If your IVA is under the new 2025 protocols, the following applies:

• Your insolvency practitioner looks at how much equity you have
• If the equity exceeds £10,000, some or all may go towards your debt if you choose to sell.
• How much is put towards the IVA will be based on how much debt is outstanding, how much equity you have and whether the sale is deemed essential (relocation, separation, etc).

One of the biggest changes under the IVA Protocol 2025 is that the family home is not treated as an asset that must be realised. This means that you will not be required to remortgage or release equity unless you choose to sell the property. The value of your equity is only used to determine the length of the IVA and not force you to take money out of your home.

Older IVAs are a little different.

• If equity is above £5,000, there must be an attempt to release equity to help pay the debt.
• A review will take place after 5 years
• If equity release is not possible, a 12-month extension is applied.
• Sale proceeds will go towards repaying the IVA in full or partially.

One welcome change introduced by the 2025 protocols means that the 5-year review no longer exists. In the earlier IVAs, homeowners faced a property valuation and equity release assessment during year five, with the risk of being asked to remortgage or extend the IVA if equity couldn’t be released. The 2025 protocol removes this, with the value of your equity only assessed at the start of the IVA, with the 60 or 72-month term set from the outset.

How is equity calculated when I have an IVA?

Equity is calculated using the 85% rule. This is where 85% of the property value is taken, and any outstanding mortgage or secured loans attached to it are deducted. This is known as your beneficial interest and determines whether an IVA lasts 60 or 72 months under the 2025 protocol.

Can I sell my house with an IVA and keep the money?

No. If you sell your home and fail to notify the Insolvency Practitioner or withhold proceeds from the sale, you could find yourself in breach of your IVA and face a host of penalties. These could include:

• Commencement of bankruptcy proceedings
• A reinstatement of the full debt
• A charge being attached to the property

Does the Insolvency Practitioner own my home when I have an IVA?

No, one of the reasons people use an IVA is that the home remains yours. It is not transferred to an Official Receiver or Trustee, like in bankruptcy. If your IVA falls under the 2025 protocol, you won’t be required to release any equity while you still own the home in order to satisfy the debt. However, IVAs issued before this change may still require equity release towards the end of the arrangement.

Is my home at risk if I have an IVA?

No, and since the 2025 IVA Protocol has been introduced, it has meant that homeowners do NOT have to remortgage to try and help solve their financial worries. With IVAs making mortgage approval difficult, and only those with high interest rates likely to be available, this change gives homeowners the added security of being able to remain in their home while servicing their debt. If the equity in the property exceeds £10,000, the IVA will be set at 72 months. This means you can continue paying off your IVA without worrying about losing your house. Where equity is less than £10,000, your IVA will follow the standard terms and automatically end after five years if it is a protocol IVA.

This only applies to IVAs approved from July 2025 onwards; IVAs issued before this time may require homeowners to release equity to help pay the debt. This will only happen towards the end of your current IVA agreement.

What does the 2025 IVA protocol mean for my house?

The IVA Protocol 2025 came into effect for new protocol IVAs in March 2025 and all IVAs in July 2025. 

Under previous rules, homeowners would be expected to:

• Re-mortgage in year 5 of the IVA
• Release equity up to 85% LTV
• Extend the IVA by 12 months if there is insufficient equity in the property

With the new rules, homeowners instead:

• Have no automatic requirement to release equity
• Have the length of the IVA determined by the amount of equity held in the home

This has been seen as a welcome boost for homeowners who were in considerable financial hardship and would struggle with remortgaging.

Having an IVA or any debt repayment scheme can be worrying. Bettermove offers a fast way to help reduce your debt before you take on an IVA or file for bankruptcy. We buy any house, and we do it without charging you a penny. Our expert team, combined with an extensive network of cash house buyers is ready to make you an offer, ensuring you sell your house on your terms, using the funds to help reduce debt, stop repossession or relocate and start afresh. Get your free offer today and sell your house fast.