UPDATED: The importance of the residential property Inventory

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Why Use a Professional Inventory?

With the introduction of the Deposit Protection Schemes (DPS) inventories are now more important than ever. If you take a deposit from your tenants (most landlords and agents do) then by law you are obliged to protect it in one of the approved schemes. If there is a claim against the deposit for damage, then without a good inventory the landlord (or agent) does not stand a chance of securing a claim when it goes to a scheme adjudicator.

Deposit disputes need to be resolved quickly and cheaply so must disputes are handled by the deposit scheme’s adjudicator based on documentary evidence alone, so the inventory alone provides the most important evidence. Going down the court route takes much longer and is expensive, so most deposit disputes don’t’ involve the courts.

It might be better for a landlord to go to court if they have a big claim that goes well beyond the amount of the protected deposit, and also if they have a counterclaim from the tenant – say if they had to pay for boiler repairs because the heating did not work for several weeks. The schemes’ adjudication cannot deal with counterclaims.

Landlords or agents can process the inventory themselves (inventory forms are available free on this website or from various suppliers listed on our Classified Directory), or as an alternative, an independent inventory company can be used. Using a professional inventory company is always preferable as they are totally independent, their evidence should be to DPS standards, and will therefore give the landlord the best chance of success with any claim.

Using an independent is less expensive than most landlords think: starting at around £75 for a Check-In and less for a Check-Out. If you use them again, the check-out forms the basis for the next check-in, so the cost usually reflects this and is less. A good idea is to have the letting agreement constructed such that the landlord pays for the Check-In and the tenant pays for the Check-Out. This has the psychological effect on the tenant reminding them that everything should be in order before they leave – they are paying for the independent assessment of this!

What is an Inventory?

An inventory should detail the condition of all décor, fixtures, fittings and contents relating to a rental property. Contrary to popular belief, an inventory is not just a list of the items to be found in a rental property and is therefore not merely restricted to furnished properties.

Furnished or unfurnished, all properties are supplied to a tenant with floor coverings, wall coverings, fixtures and fittings and the state or condition of these needs to be noted before a tenant moves in if the landlord’s investment is to be protected.

Quantifying ‘condition’

This is a much-debated issue and a good inventory will include a glossary of terms which will define the exact meaning of the word for the purposes of the inventory document.

The glossary should feature at the front of the inventory.

The glossary should refer to: Brand new / unused condition: possibly still in original packaging, or with new tags / labels attached

Good condition: signs of slight wear, generally lightly worn

Fair condition: signs of age, frayed, small light stains and marks, discolouration

Poor condition: extensive signs of wear and tear, extensive stains / marks/ tears / chips but still functional

Very poor condition: extensively damaged / faulty items, large stains, upholstery torn / dirty, pet odours / hairs

The inventory will provide a detailed and comprehensive description – ideally supported by photographic evidence – of the property, with specific reference to the existence / condition of the décor, fixtures, fittings and contents.

Comments need to be made in relation to the colour, make, model and condition of each item – basically, there needs to be as much detail as possible to provide an accurate and objective assessment of the property.

As a rule of thumb, lofts and cellars are not normally included in an inventory, unless specifically agreed or used as part of the living accommodation.

Top tips for landlords:
Contents:

• to prevent any discrepancies, it is always best to have a property professionally cleaned prior to the tenants moving in, and to gain a receipt for this service
• if the tenancy includes access to the garden make it clear from the outset as to whether or not a tenant will be responsible for reasonable maintenance of this area
• make sure all meters are read at the start of the tenancy
• include in the inventory, a list of appliance manuals / warranties (if they exist)
• Photographic evidence is hugely advantageous and is particularly useful for highlighting unusual or expensive items and areas of damage. If a photograph is taken of a mark / scratch, it is useful to incorporate a tape measure / ruler to give some sense of perspective.

Otherwise, if a scratch has been recorded but not measured, significant further damage can be inflicted with no course of redress.

The Check-In – Cleanliness

Occupancy – the length of occupancy will also need to be taken into consideration – the impact of a two-year occupancy may vary enormously to the toll of a 6-month occupancy.

Equally, when a tenant has enjoyed a five-year stay in the same property, it becomes very difficult to prove unacceptable wear and tear.

Smokers

Consent for smokers or pets in the property will have implications on the expected condition of the property at the end of the tenure.

The tenancy agreement may contain specific clauses relating to the required care and attention of particular items / amenities which the tenant has access to during the term of his / her stay.

Disputes relating to fair wear and tear often centre on common themes which include:

Cleanliness

What one person deems to be acceptable may be considered to be sub-standard by another. The important point to remember when it comes to assessing cleanliness is that agreement is reached at the check in stage.

For instance, if a property was noted as dirty at the check in and either the agent or landlord arranged for professional cleaning to be carried out after the check in, then the tenant is required to ensure that the property is vacated in a professionally clean condition.

The landlord or agent need to ensure the receipt for the professional clean at the check in is provided although the tenant must be given the opportunity to clean the property to a professional
standard themselves at the end of the tenancy should they wish to do so.

Fixtures and fittings

Tenants need to be made aware of the fact that if they choose to introduce new items, which need to be fixed to the walls, agreement must be received from the landlord in advance.

Failure to do this will result in the landlord asking for these items to be removed and making a claim to restore the wall back to its former state.

Brand Appeal

Most items in the property will have a pre-determined life span but this will also be influenced by the quality of the product, accepting that certain brands have an enhanced reputation for withstanding wear and tear, which is usually evidenced by an extended warranty.

If a landlord chooses to furnish the property with cheaper, non-branded goods, it is only fair to accept that these may not last the duration of the tenancy.

Typical examples of fair wear and tear v damage

If the landlord permits children and / or pets at the property, light scuff marks to walls, particularly stairs,

The Check-Out

A final inspection of the property should be undertaken prior to the tenant actually moving out, once completed.

Tenants should not be allowed to re-enter the property unless specific arrangements have been agreed with the landlord or agent.

A copy of the original signed inventory should be used as the basis of discussions between the landlord or agent / inventory clerk and tenant.

Each room should be visited and the condition of décor/ fixtures / fittings and contents should be compared with that witnessed at the beginning of the tenancy.

If redecoration works have been undertaken, the Check Out report should note whether or not these have been done to a professional standard.

As per the Check-In procedure, all meters should be read and keys checked to ensure they fit the appropriate locks.

All keys should be returned at this point.

Where changes are noted in the condition of the property, it should be detailed whether or not these can be construed as acceptable wear and tear.

If they are not regarded as fair wear and tear, who should be responsible for making the necessary improvements to restore the property to its former condition.

A forwarding address for the tenant should always be confirmed at the Check-In and contact numbers secured.

Depreciation

If an item or fixture / fitting is damaged and a replacement is required, then the replacement cost is subject to a Depreciation Deduction. This means, that unless the item was brand news at the start of the tenancy, the landlord cannot charge the full cost of replacement for damaged / missing items.

• Carpets – 3-5 years
• Furniture – 3-6 years
• Lawnmowers – 2-3 years
• Kitchen appliances – 2-5 years
• Small electrical goods eg kettles, hoovers, food processors) – 1-3 years
• Painting / decoration – 3-5 years

Typically, any calculations on the replacement cost of an item should be made as a percentage of the replacement value. Here is an example:

A lounge carpet was in fair condition, with some worn areas and numerous light spot marks at the commencement of the tenancy.

It could be reasonably be assumed that the carpet was of medium / good quality and approximately 3 years old. The replacement price is estimated to be £500.

The carpet has been completely ruined by the tenants, with numerous cigarette burns and heaving staining to all areas. The only solution is to replace the carpet.

As the carpet was of medium / good quality the life expectancy would be estimated as five years. This would equate to £100 per year.

However, as the carpet was already three years old at the commencement of the tenancy, it is now four years old, meaning that it only has one more year before it reaches its anticipated life expectancy. Therefore the most the landlord can claim for in terms of replacing the carpet is £100 (I year expected lifetime x £100).

Failure to observe the above protocol may result in the break down of what should be a harmonious relationship between landlord and tenant – and most importantly, will also activate the inconvenience and enormous distraction of a potential dispute case.

This article was originally provided by Professional Inventory Company, “No Letting Go” www.nolettinggo.co.uk and has been reviewed and updated by Tom Entwistle

View Full Article: UPDATED: The importance of the residential property Inventory

80% of landlords ‘were ready for EPC changes’ scrapped by Rishi Sunak this week

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Rishi Sunak’s decision to scrap tougher EPC rules for rented properties may spark anger among some landlords following new research that four in five of them had already made preparations to meet the former minimum ‘Band C’ requirement.

Lender Shawbrook spoke to over 1,000 landlords and found that 80% said they were already prepared for the 2025 EPC regulation deadline and of these,  30% said their properties already have an EPC rating of A-C, while half said they had plans in place to improve their EPC rating before 2025 when all new tenancies were due to be included in the new regulations.

U-turn

Some landlords may view this week’s U-turn as a waste of their money – Shawbrook found that nearly half of the landlords it quizzed had spent between £500 and £20,000 on improving or investing in their properties over the past year, spending on average some £25,000 across the UK and £37,000 in London.

The now scrapped EPC proposals had also prompted many landlords to be more energy conscious when investing in new property, with over a quarter prioritising buying newer, more energy efficient properties during the next six months.

“Scrapping the impending EPC regulations might free up capital in the short term for landlords who haven’t yet invested in improving the energy rating of their properties,” says Emma Cox (main picture), Managing Director of Real Estate at Shawbrook Bank.

“But while policies shift, climate change is going nowhere, and energy efficient buildings will remain central to net zero plans.

“Rules might not be changing as soon as 2025, but professional landlords with modern, energy efficient stock will be in the best position to attract tenants, as well as reduce potential voids, and importantly, be prepared for future legislative change.”

View Full Article: 80% of landlords ‘were ready for EPC changes’ scrapped by Rishi Sunak this week

Sunak’s betrayal: How the PM stabbed landlords in the back with his EPC U-turn

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Rishi Sunak has once again shown his true colours as a Prime Minister who does not care about the interests of landlords and the private rented sector.

In a shocking move, he has scrapped the plans to enforce minimum Energy Performance Certificate (EPC) ratings for rented homes

View Full Article: Sunak’s betrayal: How the PM stabbed landlords in the back with his EPC U-turn

Offering sex for rent via classified ads should be ‘specific offence’ say campaigners

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The government is being urged to bring in a dedicated ‘sex for rent’ law to protect tenants after it promised to clamp down on predatory adverts.

The recently passed Online Safety Bill will target the adverts and hold online platforms such as Gumtree and Craigslist responsible for preventing them from being posted.

Illegal content, including the adverts, will have to be removed, while the platforms must enforce promises they make to users who sign up through terms and conditions and offer them the option to filter out harmful content.

If the platforms don’t comply with these rules, Ofcom could fine them up to £18 million or 10% of their global annual revenue, whichever is biggest.

However, despite the prevalence of the practice, only one person has ever been convicted in a sex for rent case because victims must legally be defined as ‘prostitutes’, which acts as a deterrent.

The UK government launched a public consultation in April, which aimed to understand the problem.

Vulnerable renters

Campaigners are still waiting for its response, but Generation Rent believes a clear and dedicated law is needed to target predators and protect vulnerable renters.

Trade association Propertymark has previously called for landlords to be banned from the PRS for life and dealt with under the Sexual Offences Act, through criminal proceedings.

Tilly Smith (pictured), Generation Rent’s campaigns and partnership officer, says the inclusion of these harmful adverts in the Online Safety Bill is a positive move but that these changes alone will not end the overriding issues that force vulnerable people into sex for rent arrangements.

“The government must act to ensure that benefit payments are enough to cover the rent, that people can access and remain in safe and secure homes, and that that renters are supported through the cost-of-living crisis,” says Smith.

View Full Article: Offering sex for rent via classified ads should be ‘specific offence’ say campaigners

Free Property Management – Exclusive P118 members deal

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Landlords costs are on the rise mortgage rates and Section 24 all contribute to reduced profits.  To add insult to injury letting agency fees are on the rise with central London agents charging as much as 20% + Vat of the monthly rent.

View Full Article: Free Property Management – Exclusive P118 members deal

Higher rents caused by more landlords than usual quitting says Bank of England

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The Bank of England has blamed higher rents on more landlords than usual quitting the private rental market within its detailed quarterly report on the economy.

Its Agents’ Summary of Business Conditions report, which covers the period between July and August this year, highlights trading conditions across a range of sectors including housing compiled by its 12 regional representatives.

This is used in part by the bank’s Monetary Policy Committee to inform its interest rate decisions – the most recent of which was published yesterday revealing that its base rate would remain at 5.25% for another two months.

The agents’ report overall that economic activity remained subdued over the summer, and that “there were growing concerns about the outlook – most notably from contacts in consumer-facing businesses, but also from the business services sector”.

Turning to housing, the report says: “contacts said that demand had remained strong [for privately rented property].

Smaller landlords

“Supply was lower than it was a year ago, as tighter regulation and higher mortgage rates had caused some smaller buy-to-let landlords to leave the market.

“The strength of rental demand, relative to supply, meant that higher mortgage rates were generally being passed through to rents.

“There was little sign of a marked increase in rent arrears, although some contacts were worried that arrears could worsen later in the year.”

This is not the first time that the Bank of England has flagged up problems for smaller landlords and problems this is likely to present for the private rented sector.

In February the bank’s notes to accompany that month’s interest rate decision also said more landlords than normal were quitting the sector.

View Full Article: Higher rents caused by more landlords than usual quitting says Bank of England

Tenant requesting for Section 21?

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Background: We purchased a 3-bed mid-terraced property in 2022 with a sitting tenant of about 14 years. On completion, we issued a new 12-month AST which is due to expire at the end of October this year. In July, we informed the tenant that we would be increasing her rent by £50/month from 1st November and followed this with a section 13 notice because the AST does not have a rent review clause.

View Full Article: Tenant requesting for Section 21?

REVEALED: What the boiler replacement scheme change means for landlords

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Landlords have more of an incentive to make green improvements following PM Rishi Sunak’s announcement that they can now claim £7,500 for a heat pump installation.

Under the Boiler Upgrade Scheme, the grant for an air source heat pump has been increased from £5,000, and from £6,000 for a ground source heat pump. The grant value for biomass boilers remains at £5,000.

The changes take effect from 23rd October and live vouchers remain worth the original value, although these can be revoked and a new application made for a voucher at the higher value after that date, according to the standards organisation MCS.

The boost comes as the government scrapped its policy to force landlords to upgrade the energy efficiency of their properties by 2028, but to continue encouraging them to do so where they can.

Landlords will only need to replace gas boilers with heat pumps once they have worn out and even then, not until 2035.

Outstanding recommendations

To be eligible for the Boiler Upgrade Scheme, a property must have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for loft or cavity wall insulation.

Landlords need to contact installers to get quotes for the work; the installer will then apply on their behalf on the Ofgem website and the grant’s value is taken off the amount paid for installation.

The government reports that 22,857 voucher applications had been received by Ofgem up until 11th Sept this year.

Gas boiler replacements typically cost £2,000-£4,500 while heat pump retrofit costs vary widely, but costs can often exceed £10,000. However, companies such as Octopus Energy are offering installations from £3,000 in England after the grant, through the launch of its Cosy 6 model.

Read more about heat source pumps.

View Full Article: REVEALED: What the boiler replacement scheme change means for landlords

Second homes in Scotland could be charged more council tax

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Council tax is set to double for second homes in Scotland.

The Scottish government has put forward proposals which would give local councils the discretion to charge council tax premiums of up to 100% on second homes.

View Full Article: Second homes in Scotland could be charged more council tax

Unusual council deal agreed to help tenants claim cash off landlords

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York Council has teamed up with Justice for Tenants (JFT) to help more residents claim rent repayment orders from errant landlords in what is claimed to be a ‘ground-breaking partnership’.

Councillors agreed the deal with the campaign group, which represents tenants during tribunals and takes a cut of the financial award if they’re successful.

JFT claims to be involved with more than half of rent repayment cases in England and already has service level agreements with many other local authorities, through sharing intelligence to support enforcement activities.

Costly

York Council’s health and sustainable homes manager, Anthony Dean, told a housing executive decision meeting that JFT provided tenants with the ability to make an application which was often time-consuming and costly.

“From the local authority’s perspective, it will assist us in terms of identifying properties that are problematic and try to encourage local residents who live in poor quality accommodation…to make a complaint because they’ll have the financial recompense should they be successful in the application,” he said.

Tenants who complain will be directed to the group.

Executive member for housing, councillor Michael Pavlovic (pictured), explained it would replace the council’s less efficient method of checking landlords.

“As a ward councillor with a lot of HMOs in my ward, one of the things that we rely on, frankly, are residents to be our eyes and ears effectively,” he said. Pavlovic added that he wanted to see the authority and JFT working together to make sure that tenants knew the partnership exists.

“It’s great having it as a system but if nobody knows it’s there, they can’t have recourse to it. And if we are trying to encourage landlords who are not aware they have to licence – there may still be some – this might be a prompt for them to register.”

Read more about rent repayment orders.

View Full Article: Unusual council deal agreed to help tenants claim cash off landlords