What happens if my landlord goes bankrupt or becomes insolvent?

Finding out your landlord has gone bankrupt, or is heading that way, can be scary. You may worry about being evicted at once, about where your deposit has gone, or about your tenancy. Here is the position for both council and private tenants.

Can I be evicted straight away if my landlord goes bankrupt?

No, not automatically. Your landlord going bankrupt does not end your tenancy. It does not give anyone the right to remove you without the normal legal process.

Your tenancy is a property right that survives the landlord's insolvency. A trustee in bankruptcy (or an administrator, for a company landlord) takes over the landlord's interest in the property. They become, in effect, your new landlord, with the same legal duties to keep the home in repair.

You can stay until a court makes a possession order and it is enforced. No one can evict you without going through the proper court process.

What happens to my deposit?

If your deposit was properly protected: since 6 April 2007, a landlord must protect any deposit in a government-approved scheme within 30 days. If yours was protected, it is held in the scheme, not by the landlord. So it is not available to the landlord's creditors, and you should be able to claim it back through the scheme at the end of the tenancy.

If your deposit was not protected: it may count as money held by the landlord, so creditors might be able to reach it. Getting it back can then be much harder, and you may need legal advice. You can also pursue the landlord (or the insolvency practitioner) separately for failing to protect it.

What to do now: if you are not sure your deposit was protected, check the three approved schemes' websites: the Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS).

What happens to repairs?

The trustee or administrator who takes over the landlord's interest also takes on the landlord's legal duties. That includes the duty to keep the home in repair under Section 11 of the Landlord and Tenant Act 1985.

In practice, an insolvency practitioner running a portfolio may not want to do optional repairs. But they must still meet their legal duties. If urgent repairs are needed to make the home safe or fit to live in, you can report them and expect them to be dealt with.

If the insolvency practitioner wants to sell the property, they may try to end the tenancy. But they still need a court order to do so.

What if the property is sold during the insolvency?

Selling the property is common during insolvency. If it is sold, your tenancy passes to the new owner. The new owner takes it subject to your existing tenancy and cannot simply ask you to leave without the proper process. All the terms of your tenancy carry on.

If the new owner wants the property empty, they must serve any notice your tenancy requires, and go through the court process if you do not leave.

What about a housing association that becomes insolvent?

Housing associations are regulated by the Regulator of Social Housing. If one runs into financial trouble, the Regulator can step in, appoint a manager, or arrange for the homes and tenants to move to another registered provider. The government and the Regulator take protecting social housing tenants very seriously here.

Tenants of an insolvent housing association are very unlikely to simply lose their tenancy without a managed handover.

What should I do?

1. Keep paying your rent. Pay as normal during any insolvency process. Not paying can build arrears that could be used as a ground for possession.
2. Find out who is managing the property. Ask in writing who is now responsible and where to send rent. Get the answer in writing.
3. Check your deposit is protected. Use the scheme websites to confirm.
4. Get advice if you need it. If you are being pushed to leave, or are unsure of your position, contact Citizens Advice, Shelter (0808 800 4444), or a housing solicitor.

When should I contact Support for Tenants?

If your landlord has become insolvent but your home is also in disrepair, you may still have a claim. Call us on 0800 030 4669 to talk it through.

No upfront cost. You only pay if you win, and the fee comes out of the compensation. If you don't win, you pay nothing.

Sources

• Insolvency Act 1986 (legislation.gov.uk)
• Section 11, Landlord and Tenant Act 1985 (legislation.gov.uk)

Related articles

• Can I claim if my landlord sold the property?
• My deposit isn't protected, what now?
• Being evicted, what are my rights?