Changing letting agent? How to move the tenancy deposit safely

Of everything that moves when you change letting agent, the deposit carries the most risk. If it ends up unprotected, your tenant can take you to court for between one and three times its value. And if your old agent hangs on to the money or goes bust, you're still the one who owes it back at the end of the tenancy.

Getting it right is mostly about order. Start by working out how the deposit is held.

Step 1: find out how it's protected

Your tenant's deposit should be protected with one of three government-approved schemes: the Deposit Protection Service (DPS), the Tenancy Deposit Scheme (TDS) or mydeposits. Each offers two kinds of protection:

• Custodial: the scheme holds the money for the length of the tenancy.
• Insured: the agent or landlord holds the money and pays the scheme a fee to protect it.

Ask your agent for the scheme name, the protection type, the deposit ID and the certificate. The prescribed information your tenant was given at the start of the tenancy should show the same details.

If it's custodial: transfer responsibility

The money stays with the scheme, so nothing has to be paid out. Only responsibility for the deposit moves from one account to another.

With the DPS, the agent currently responsible can transfer the deposit through its online account, and the transfer is immediate. Alternatively, the new agent requests the transfer and the DPS asks the current agent to authorise it. TDS and mydeposits run their own processes, so check with your scheme.

Chase the old agent to approve promptly, and keep the scheme's confirmation once it's done.

If it's insured: protect first, then move the money

Here the old agent holds the cash, so it has to physically move. The safe sequence is:

1. The old agent gives the new agent a written undertaking to transfer the deposit once it's protected.
2. The new agent protects the deposit under its own scheme membership, on the strength of that undertaking, before the money arrives.
3. The new agent sends the old agent the new protection certificate.
4. The old agent transfers the money.
5. The new agent gives your tenant updated prescribed information, and the old protection is closed.

The Property Ombudsman backed this approach when a landlord complained that an outgoing agent wouldn't release a deposit. The agent was right to wait for proof of the new protection, because it would have stayed liable if the new agent had failed to protect the money.

Don't skip the new prescribed information. The legal deadline for protecting a deposit and giving the tenant the information is 30 days from receiving it, and you don't want an argument later about when that clock started.

Changing scheme or protection type

If the deposit is moving to a different scheme, or from insured to custodial, treat it as a fresh protection. Protect it in the new scheme, give your tenant new prescribed information within 30 days, and don't let the old protection end until the new one is in place.

What to tell your tenant

Your tenant usually doesn't need to do anything for the deposit to move, but they should know where it is. In your letter about the switch, tell them which scheme now protects it and include the new certificate and prescribed information. It also saves them a worried phone call when an email arrives from a scheme they've never heard of.

Your deposit checklist

• Scheme name, protection type and deposit ID
• The current certificate, and the prescribed information given at the start of the tenancy, with proof it was given
• A written undertaking from the old agent, for insured deposits
• The new protection certificate, before any money moves
• The scheme's confirmation that the transfer is complete
• New prescribed information given to your tenant, with proof
• The deposit amount, checked against the tenancy agreement

If the old agent won't cooperate

Chase in writing with a deadline, ideally as part of a full handover request. If that fails, use the agent's complaints procedure and then its redress scheme. Letting agents in England that hold client money must also belong to a client money protection scheme, which is there as a safety net if an agent loses or misuses money it holds for clients.

Don't let it drift. An unprotected deposit is a claim waiting to happen, and the claim lands on you.

This guide covers England and is general information, not legal advice.