One of the most important pieces of documentation you will have as a landlord is your inventory. To ensure that you protect your property and prevent deposit issues with your tenants, we have a guide to inventories and avoiding disputes:
“The outcome of a dispute is decided at the start of a tenancy – not the end!” says Lisa Williamson, the Operations Director of inventory firm No Letting Go.
That’s because you must prepare your inventory before any tenants move into your property. At check-in, your tenants should use the inventory to go around the property and note any changes to the report. Throughout the tenancy, you should make periodic inspections to identify any damage that does not correspond to the inventory report. Finally, at check-out, compare the condition of the property to the initial inventory to identify any deductions that need to be made from the tenant’s deposit.
No inventory = no evidence
If you do not have an inventory, you will not have evidence to offer your deposit protection scheme in the event of a dispute. Inventories are critical for the adjudication process and make the resolution much easier and quicker.
The quicker the process at the end of the tenancy, the shorter the void period in between tenants, which will ensure that you don’t miss out on rental income. Depending on your landlord insurance provider and the type of cover you have purchased, not having an inventory could breach your terms.
Compiling a good inventory
A good inventory should be unbiased and compiled to a professional standard. The report should list and describe the quality of the property’s contents, décor, fixtures and fittings, for both the interior and exterior.
Remember, an inventory does not just list the items within the property, but the condition of the building and its contents.
As 85% of deposit disputes involve cleaning, it is important to embed photographs within the report.
Additionally, do not forget to include meter serial numbers and disclaimers. There must also be a declaration page at the end of the inventory for signatures.
Example of a bad inventory:
Example of a good inventory:
The check-in process
Surprisingly, accidental damage of a rental property most commonly occurs at either check-in or check-out.
The inventory must be checked, agreed and signed BEFORE tenants move in. They should use the report to check each room in the property, and make appropriate amendments. Both parties must agree these changes and any photographs.
Only when the inventory is fully agreed and signed should the landlord or letting agent release the keys to the tenant.
Remember: Many deposit claims are rejected because the tenant has not signed the inventory.
Importance of periodic inspections
Landlords should conduct periodic inspections of their property to ensure not only that it is being looked after, but also that the tenant is not breaching the tenancy agreement. Inspections will also highlight any maintenance issues that need solving.
You should document and communicate any issues raised during a periodic inspection with the tenant, which can later be used as evidence.
Landlords are advised to carry out property visits every three to six months, but remember that you need to give at least 24 hours’ notice to the tenant and have their permission.
No Letting Go suggests that landlords should remind tenants of their responsibilities around four weeks before check-out. You should also give your tenant the opportunity to be present when you make the visit.
Always compare the state of the property at check-out to the initial inventory report. No Letting Go advises landlords to focus on cleanliness, damage, missing items, gardens, items left by the tenant, keys and meter readings.
Once you have inspected the property, you should compile a clear and concise report that lists any changes to the property and include photographs.
If you plan to make any deductions from the tenant’s deposit, you must notify the tenant within ten working days of any proposed deductions. A full schedule of costs should then be completed within 28 days of check-out.
If a dispute arises, the landlord or letting agent must take reasonable steps to resolve the matter before referring it to the deposit protection scheme. If no agreement can be reached, the scheme must be involved.
The adjudication process
The adjudicators used by your chosen deposit protection scheme will base their decision purely upon evidence provided by all parties. This means that your tenancy agreement, inventory, check-in and check-out reports are vital.
The adjudicator will not visit the property, call you or your tenants, or request further evidence, but they will consider photographs and property inspection reports.
You must also supply receipts or estimates for any work that has or must be completed as a result of damage to the property.
Remember, this is the tenant’s money that they are dealing with, so the tenant will receive their deposit back in full, unless you provide satisfactory evidence. The scheme aims to resolve the dispute within 30 days of receipt of the evidence.
The decision by the adjudicator is final and binding on all parties.
Recommendations from deposit schemes
The three Government-approved deposit protection schemes advise that inventories should be compiled to a professional standard. In addition, all schemes prefer landlords or letting agents to use independent inventory firms.
They suggest that you always include photographs in your reports and accompany your tenant at check-in and check-out. You must have a high quality, unbiased inventory report to gain agreement quickly and avoid dispute.
They also recommend conducting regular, documented property visits and ensuring that your tenants know their rights.
Landlords, follow No Letting Go’s advice to make sure that you compile thorough inventories and avoid disputes with tenants.
Disclaimer: This article is for information only and is not official guidance, FCA approved, or legally precise. Just Landlords has used all reasonable care in compiling the information but make no warranty as to its accuracy. If you require information on landlord legislation or best practices please contact your legal representative. For details see our conditions.