Changing tenants: how to handle the deposit correctly

Tenant changes are where deposit protection quietly breaks. Each scenario has a correct sequence, and skipping it creates liability.

4 min read · Updated 21 August 2026

Overview

Deposits attach to a tenancy and to the people who paid them. When the occupiers change, you have to decide whether the tenancy continues with a deed of assignment, whether a new tenancy is created, and what that means for protection, prescribed information and any deductions. Sharer swaps in student and professional houses are the most common trigger and the most common source of error.

Why it matters

An incorrectly handled swap can leave a deposit protected in the wrong names, which is treated as a protection failure with the full compensation exposure.

Legal requirements

A new tenancy generally requires the deposit to be protected afresh and information reissued.
Deposit records must name the correct tenants and the correct payer.
On a sale, the deposit transfers to the buyer who must protect it and serve information.
Any deduction agreed with a departing sharer should be documented in writing by all parties.

Common mistakes

Letting an incoming sharer pay the outgoing sharer directly with no scheme update.
Keeping the original protection record unchanged for years while occupiers rotate.
Deducting for damage from a departing sharer without the remaining tenants' agreement.
Forgetting to reissue prescribed information after a deed of assignment.

Practical guidance

Decide up front whether you are assigning the existing tenancy or granting a new one.
Update the scheme record and reissue prescribed information for any change of tenant.
Use a short written agreement covering the deposit position between outgoing and incoming sharers.
Carry out a room level inspection at each change so responsibility stays traceable.

Sharer swaps in a joint tenancy

Where one of four sharers leaves, the cleanest route is a deed of assignment signed by the outgoing tenant, the incoming tenant, the remaining tenants and the landlord. The tenancy continues, the deposit stays in place and the scheme record is updated to name the new tenant. The alternative, ending the tenancy and granting a new one, resets the protection clock and the notice protections, so choose deliberately rather than by default.

Selling a tenanted property

The deposit must move with the tenancy. Agree the mechanism in the sale contract, transfer the funds or the custodial holding to the buyer, and make sure the buyer protects it and serves prescribed information within thirty days of the transfer. Provide the buyer with the inventory, the check in photographs and the compliance file, because they inherit the evidential position as well as the money.

Frequently asked questions

Can an incoming sharer just pay the outgoing one?

Only if the scheme record and the paperwork are updated to reflect the change. An informal cash swap leaves the deposit protected in the wrong name.

Should I inspect at each sharer change?

Yes. Without a condition record at the change, the departing sharer's responsibility becomes impossible to prove at the end of the tenancy.

Does a rent increase require the deposit to change?

Not automatically, but if you increase the deposit it must stay within the statutory cap and the extra must be protected and documented.

Plain-English UK compliance changes, Renters' Rights Act 2025 updates and new guides — no spam, unsubscribe any time.

This guide is general information for UK landlords and letting agents, not legal advice. Rules differ across England, Wales, Scotland and Northern Ireland — check your local requirements or take advice before acting.