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Change of landlord

This content applies to England

The rules governing the return of the tenant's deposit when there has been a change of landlord.

Return of deposit

As a general rule, when there is a change of landlord, the new landlord will take on the responsibility for the return of the deposit at the end of the tenancy, regardless of whether the old landlord passed on the tenant's deposit or not. This is because in law the new landlord takes on the benefits and liabilities of the old landlord.[1]

Protection of deposit

When a deposit is protected in a government-approved scheme, the procedure for ensuring that it remains protected depends upon whether a custodial or an insurance scheme is being used. In either case, however, much will depend on the rules of the particular scheme, and advisers should check for any requirements imposed in connection with a transfer of landlord and whether these have been complied with.

For more information about the different types of tenancy deposit protection scheme and links to their websites, see The approved schemes.

Custodial scheme

A deposit placed in a custodial scheme will remain protected unless action is taken by the landlord or tenant to remove it after the end of a tenancy,[2] or otherwise in accordance with scheme rules. This includes cases in which there is a change of landlord. However, the scheme rules may require that a particular procedure is performed in connection with the change (for example, notification of the scheme). If this is not complied with, then the deposit will no longer be being 'dealt with in accordance with an authorised scheme' and there may be penalties for non-compliance.[3] Specifically, the new landlord may be unable to serve a section 21 notice, and the previous landlord may be at risk of a financial sanction.[4]

Insurance scheme

The legislation around tenancy deposit protection is silent on what happens to the deposit in an insurance scheme when a landlord changes. However, the scheme rules are likely to require that notification is given of the change. The scheme may simply change details on notification, may end protection (thus requiring the new landlord to protect the deposit afresh, either in the same scheme or in a different one) or may require that the new landlord protects the deposit before ending the existing protection.

The contract of sale will normally provide that the deposit is transferred from the old to the new landlord. Where this occurs, the new landlord will have to ensure that the deposit is protected. If protection has ended, s/he will have to make arrange new protection within the relevant time limits (currently 30 days, but see Time limits for compliance for details of when different time limits were applicable).[5] S/he will also have to serve the prescribed information on the tenant within the time limit.[6] If the new landlord does not do so within this time, s/he will risk all penalties for non-compliance.

Where the deposit is not transferred from the old to the new landlord, the obligation to ensure that it is protected (and the risk of a penalty if it is not) will continue to rest with the original landlord.[7] It is, however, in the new landlord's interest to ensure that protection continues, as if it does not s/he will be unable to serve section 21 notice.[8]

Tenants of mortgagors being repossessed

In the case of tenants of mortgagors where the lender is taking possession proceedings against the tenant's landlord, the lender will only be responsible for the return of the deposit to the tenant if the lender is bound by the tenancy, and so has become the tenant's landlord (see the Tenants of mortgagors section for more information).

Wales

The legislative references and the footnotes on this page reflect the law in England. In Wales, very similar rules made under Welsh legislation apply, but the references may be different. Visit Shelter Cymru for more details about the law in Wales.

[1] s.3 Landlord and Tenant (Covenants) Act 1995.

[2] para 4(1), Sch 10, Housing Act 2004.

[3] s.213(1) Housing Act 2004.

[4] s.214(1)(b) and s.215(1) Housing Act 2004.

[5] s.213(3) Housing Act 2004.

[6] s.213(5) and s.213(6) Housing Act 2004.

[7] s.213(3) Housing Act 2004.

[8] s.215(1) Housing Act 2004.

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