One of the biggest – and most expensive – mistakes made by many a landlord is avoiding or skimping on conducting an inventory at the beginning and end of each and every tenancy, says the Property Investment Project.
Get this critically important initial step wrong and you could find yourself seriously out of pocket because of the need for expensive repairs and reinstatement. Or, involved in an interminable wrangle with outgoing tenants about the amount of the deposit that must be returned.
What is an inventory?
An inventory lists and describes the current condition of everything in the let accommodation. And everything means everything – from the walls to the floor and ceiling, from cupboards to kitchen units, doors, and windows, from bathroom fittings to furniture and even the state of the garden and any outbuildings.
A good inventory is a comprehensive and extremely detailed document – and one that is typically illustrated by photographs that back up descriptions about the contents of the let property and the condition of individual items, including their general cleanliness.
Don’t be tempted into thinking that an inventory only needs to cover items such as the furniture in the let premises or the condition of crockery, cutlery, and pots and pans. In fact, it covers everything from floor to ceiling:
- the flooring and floor coverings such as carpets or linoleum;
- the condition of any windows and the curtains or blinds at those windows;
- the walls and any coverings on the walls, such as wallpaper;
- the ceiling;
- the paintwork;
- the condition and serviceability of any gas or electrical appliances;
- furniture – including chairs, tables, sofas, beds, and other items; and
- kitchen appliances, such as cookers, fridges, microwaves, washing machines, any other appliances and such items as crockery, cutlery, and pots and pans.
A simple model inventory is suggested by the housing charity Shelter, but such documented agreements may be considerably more detailed and complicated.
In short, the inventory provides a detailed snapshot of the contents and condition of the let accommodation the moment a tenant moves in.
The landlord – or the landlord’s agent – and the tenant go through the document together and agree its contents.
That initial inventory may prove critical in resolving any dispute at the end of the tenancy – since the inventory provides evidence of the condition of the let property the moment the tenant moved in, explains The Tenants Voice. It is as important to you, the landlord, as it is to the tenant, therefore, that the inventory is verified by both parties as soon as possible – and a copy of the signed document also given to your tenants.
Why is an inventory important?
As already mentioned, the inventory provides a detailed snapshot of the condition of the accommodation, and its contents, the day on which the tenant moves in.
Establishing that base has become even more important since the introduction of the Tenancy Deposit Protection Scheme, which requires landlords to place the deposit generally taken from the tenant at the beginning of the tenancy with a government-approved and independent third party.
The reason for taking a deposit is to give the landlord a degree of security in the event of breakages and damage during the course of the tenancy. Establishing the base starting point for the condition and contents of the property is, therefore, critical.
The inventory prepared and agreed by landlord and tenant at the beginning of the tenancy is then compared with a similarly detailed inventory at the termination of the tenancy in order to determine any damage and breakages for which the tenant may have been responsible. This, in turn, is used to determine any percentage of the initial deposit to be withheld by the landlord to cover any damage or breakages.
Once the landlord and tenant agree on how much of the deposit is to be returned, the appropriate sum is released by the independent deposit-taking company.
Even when there is agreement on any amount to be deducted from the deposit, you need to provide estimates for the remedial work and inform the tenant in writing of the sum to be deducted. If you are unable to agree the final inventory check with the tenant, the deposit remains in the hands of the Tenancy Deposit Protection agents until the dispute is resolved – if necessary, using the scheme’s free Alternative Dispute Resolution service.
Why is it important to keep inventories up to date?
Many tenancies may last more than a few years, of course, and any initial inventory is likely to become outdated through normal wear and tear of the premises and any damage or breakages caused by the tenant.
For the avoidance of any eventual doubt and in order to monitor the way in which the tenant may be using the let property, therefore, it is in both parties’ interests for the inventory to be updated regularly – say once a year. You might need to remember, however, that you need to give the tenant reasonable notice of any request to visit the premises in order to conduct an inventory.
When creating an inventory – whether the initial inventory or an update – it may be useful to take photos of any large items so that there is proof of what the item looked like. These can be attached to the inventory so that the tenant can agree the condition of the item or items.
It may be some time – especially in the case of a long-term tenancy – between agreement on the initial inventory and the changes in the condition and state of the let property on termination of the tenancy.
The longer that period, the greater the potential for disputes between landlord and tenant on responsibility for any changes in the condition of the property.
Regularly updated inventories, agreed by both landlord and tenant, therefore, may help to dispel this potential for disagreement at a later date.