Property inventories - why prevention is better than cure

Prevention being better than cure is not a new concept, in fact it’s been around since the 16^th Century and has been a mantra for the NHS for a few years now. In the health service the aim is to keep people healthy through lifestyle choices, to prevent the surgeries and hospitals being overwhelmed and to reduce workload. And, in the current climate as we navigate our way through COVID-19 that’s more important than ever.

The Royal College of Nursing states that ‘Nursing is about providing quality, evidence-based care and support…’ and this is not that different to being a successful landlord.

Putting in the effort to prepare a quality, truthful and robust inventory is the first step to making sure any tenancy starts with firm foundations.  As well as safeguarding the interests of both landlord and tenant, it should go a long way to helping you avoid a number of issues both during and at the end of, the tenancy. 

Disagreements with the tenant over the condition of the property at the end of the tenancy and, whether any deductions from the tenancy deposit are due (if one is in place) are some of the most common flashpoints landlords face.

This article, written by NRLA deposit protection provider, mydeposits, will discuss the following:

• What a property inventory is and why it’s so important
• The importance of mid-term property inspections
• What makes a good inventory?
• The end of the tenancy and negotiating
• An example of an actual dispute
• Hints and tips in creating the inventory

An inventory is a detailed and comprehensive document that lists the contents and fixtures in a property, their condition and the standard of cleanliness throughout. It is important to have a good inventory in place when the tenancy starts, to protect the landlord’s property and the tenant’s deposit. It is prepared immediately prior to the tenant moving in and should, where possible, be supported by date-stamped photographs and - if necessary - video footage. As part of a wider report, it might also highlight any outstanding repairs, provide meter readings, and crucially detail any issues raised by the tenant.

To avoid any issues at the end of the tenancy it is best practice to reference check your tenants at the start of the tenancy and, maintain good communication throughout their time in the property. However even the best tenants can cause unintentional damage. From carpet stains and holes in the walls to damaged skirting boards and newly occurring damp, there are numerous reasons why you may wish to negotiate with your tenant about withholding a proportion of the deposit at the end of the tenancy to put things right.

The inventory is the most important document used for negotiating costs at any point during the tenancy, but commonly when there is dispute at the end of the tenancy. Without a robust and tenant-signed check-in inventory, the landlord will find it difficult to:

• Propose any costs and negotiate with the tenant, or
• Make a successful claim against the tenant for damages to the property that occurred during their stay

Mid-term inspections

Whether by design or not, many landlords find themselves with long-term tenants. A settled and happy tenant is more likely to treat your property like their own home, looking after it and reporting any issues that arise. But however long your tenant is in place it pays not to become complacent. A long-standing tenant may not notice an issue because they’ve become used to it. Alternatively, their living habits may even be causing or exacerbating a problem, such as damp through poor ventilation or drying clothes on radiators.

For this reason, mid-term inspections – or property visits - are crucial. They can identify developing issues such as damp and mould that may be easily solved through early intervention but which, if not treated early, may become a bigger problem.

In addition to protecting your assets, regular inspections can improve landlord-tenant relationships by encouraging more open lines of communication. Your tenant will feel like their rental contribution isn’t simply being taken for granted and it’s an opportunity for them to raise any concerns they might have about the property, or even the rent itself, which could be discussed face to face, rather than allowing things to escalate.

A mid-term inspection is also an opportunity for you to simply and quickly check that the terms of the tenancy agreement are being maintained. Illegal activities, keeping pets when not allowed and sub-letting are quite difficult to hide at relatively short notice and the expectation of regular visits may dissuade the tenant from doing any of these things in the first place.

A mid-term inspection is recommended every three to six months (no sooner than three). In Wales inspections must take place every six months for a house in multiple occupation (HMO), with the first routine visit taking place within the first two to six months of the tenancy. A report should be created which recognises any changes in the condition of the property or its contents alongside each mid-term inspection.

A good inventory should be honest, comprehensive, legible, and clear. Descriptions should be detailed where necessary but without waffle. Too little detail or too vague, and things could be open to interpretation; too much and it could be confusing. It’s also recognised as best practice for your inventory to include supporting photographs.

The inventory should form the basis for the tenancy and, as the landlord, help to manage all expectations on how the property should be left when the tenancy ends. This in turn supports the tenancy agreement which lays out the responsibilities of the tenant.   

With the increasing part that technology plays across the industry and the prevalence of inexpensive apps and software, it is now possible for almost anyone to create a good quality report. However, the availability of technology alone may not mean that a report is fit for purpose; the ability and role of the person carrying out the task is also relevant. The Association of Independent Inventory Clerks (AIIC) said in 2020: “We believe that everyone in the lettings industry now understands the vital importance of providing inventory and check-out reports in addition to making sure they are transparently compiled by an unbiased, third party.”

Whilst an inventory created by a qualified and independent professional might be preferred by some adjudicators and landlords, whoever creates the inventory it is critical that:

• The inventory is given to the tenant when they move in
• The tenant has the opportunity to check it and raise any queries
• It is ideally signed by the tenant (though time and date-stamped emails, and other signed declaration forms may be good evidence)

If there is any disagreement at the end of the tenancy between you and the tenant, the quality and thoroughness of the inventory may be crucial in resolving any dispute and avoiding the need to go to adjudication or court.

Whenever the tenancy ends and however long the tenant has been in the property, it is in the interests of the landlord to carry out a check-out inspection. This should be carried out using a check-out report which, unlike the detailed check-in report, can be far more concise as its main function is to highlight any changes to the original report.

Again, this should include both written commentary and time-stamped/dated photos/videos to highlight any changes. Photos should be taken at the same angle to show any changes, deterioration, or additional damage.

Regardless of whether the tenant paid a tenancy deposit or some other form of security, it is the landlord’s responsibility to prove that the tenant‘s actions or omissions have caused the damage, breakages, need for cleaning, or items missing from the inventory.

Negotiating with the tenant

Any negotiation between you and the tenant will rely heavily on how robust the paperwork you have is, including the inventory check-in report. Any proposed cost must be fair and must be for reasons that go beyond ‘fair wear and tear’.

Before you start the process make sure you have all the evidence to hand and that you remind the tenant what their responsibilities were during the tenancy.

If negotiation is unsuccessful for any reason and you are unable to agree any costs, then you or your tenant can choose to go through a more formal dispute resolution process (ADR). Find out more about the dispute resolution process mydeposits provides here.

Dispute example – Carpets

The condition of carpets is, unsurprisingly, a particularly common and contentious issue at the tenancy end due to gravity – if you drop something it ends up on the floor – and, because fair wear and tear can come into the ‘cost’ equation.

The example below is taken from a mydeposits dispute case; it goes to highlight the importance of having a comprehensive inventory to fall back on if needed.

Disputed amount: £180 for carpet cleaning

Tenant: “The carpets were not very clean when we moved in and there were lots of small marks throughout, so we should not be charged for this.”

Landlord response: “The carpets were not new, but they were in an excellent state of cleanliness at the start; they were cleaned only a few weeks before the tenant moved in.”

Evidence provided: Tenancy agreement, check-in report, check-out report, invoice for professional carpet cleaning at the end of the tenancy.

The reports:

• The check-in report was brief, in a tick box style and listed the carpets as in ‘generally good condition’. There were few photographs, and no separate comments about the standard of cleanliness.
• The check-out report recorded that the carpets were lightly soiled with numerous small marks and one large stain in the centre of the living room. Detailed photos were provided as evidence.

Adjudicator’s decision:

• The living room carpet was accepted to have been returned cleaned to a worse standard
• The large stain was not recorded on check-in and was not reported by the tenant
• As the standard of cleanliness was not detailed in the check-in report nor any invoice provided to show that a professional clean was carried out before the tenancy start date, only a proportion of the cleaning invoice could be awarded

Award:

Tenant: £70     Landlord: £110

Learning points:

• Tick box style reports do not always allow enough detail or accuracy
• Keep receipts for anything you’ve purchased or work you’ve had done
• If describing the size of a stain or damage use a ruler or a hand to show the scale of the issue
• Fully describe both the level of cleanliness and condition of the property and contents; fair wear and tear applies to condition only
• Take detailed and time/date-stamped photos/videos as evidence

• Always date your paperwork and reports
• Include as much detail as possible for items and areas on the inventory check-in report. E.g., ‘single iron mark on kitchen work top’
• Keep to the facts and avoid emotive language such as ‘lovely’. It doesn’t have to read like a story, it just needs to be accurate
• Ensure the tenant has time to see and sign the report
• Include a list of definitions if you choose to use abbreviations in your reports

A comprehensive, signed inventory supported by the tenancy agreement are the foundations for a smooth tenancy, helping to manage the expectations of both the landlord and tenant.

If there are costs you feel are due at the end of tenancy, discuss this first with the tenant; negotiation early in the process has far better results for both parties, than going through a lengthy formal dispute process. The best way to avoid this is to:

• Have a comprehensive check-in report to refer to, which can be easily compared to the check-out report at the tenancy end
• Make sure that your tenant knew what was expected of them during their tenancy
• Be a responsible landlord by maintaining a good relationship with your tenant and carrying out regular inspections

Things can go wrong no matter what precautions you take and what safeguards you put in place. The existence of a quality signed inventory will assist you in a deposit dispute but, should things escalate our tenancy deposit partner mydeposits operates a tried and tested dispute resolution process. Read more about them here.

NRLA members get a 30% discount on the deposit protection fee when you protect a deposit with the mydeposits insurance-based scheme in England and Wales.