Location

These Notes are intended as a layman’s description of the essence of the legal requirements surrounding Inventories. Please note that any reference to Statutes and Regulations should always be read in conjunction with the full text of such Statutes and Regulations and any subsequent interpretations and amendments.

Sometimes Regulations and interpretations change at short notice and there may have been changes in law and practice since the production of these Notes. Legal or other professional advice should always be sought where there is uncertainty, dispute or potential litigation.

Whilst these Notes have been compiled with care, no responsibility for loss, occasioned to any person, company or organisation acting or refraining from action as a result of the material included or omitted from these Notes, can be accepted by the authors or publishers.

Material contained in these Course Notes is the copyright of TFP Online Ltd. No consent is given for these Notes to be copied, presented, stored or otherwise reproduced in any way. Applications for consent to copy must be made in writing to TFP Online Ltd and only when written consent is given may these Notes be reproduced.

There are many types of inventories and this course relates to inventories in use in residential letting only.

Introduction

The course is designed for anyone who has the responsibility for producing inventories, check-in or check-out reports. It will appeal to those with little or no experience of producing professional inventories and the other documents required in the process of safely moving a tenant in.

In addition, this course is also useful for those who are responsible for deposit dispute resolution.

The course is about achieving a higher standard and producing robust inventories that will survive the scrutiny of Tenancy Deposit Protection (TDP) Adjudication.

We plan to go beyond the process of producing a good inventory and explore the procedure and best practice required as well as the legal framework and the wider responsibilities involved in providing this service.

Crucially, this course examines how to survive a move out dispute. TDP Adjudication requirements are explained as well as how to assess damages and calculate claims. What can the landlord and the tenant reasonably expect?

 

Protecting the landlord’s interests and reputation is a crucial part of an inventory. Best practice in the provision of inventories and good check-in and check- out procedures are key to avoiding disputes with tenants and ensuring success in adjudication.

Tenancy Deposit Protection is having a major impact on the process for returning deposits at the end of a tenancy. Increasing numbers of tenants are using dispute resolution provided by the deposit schemes. Many agents and landlords who fail to produce robust and accurate inventories are struggling to defend their position.

The purpose of this course is to help achieve higher and consistent standards. We will examine:

• Purpose of an Inventory and the role it takes in the letting process
• Independence and accuracy
• Best practice and achieving consistency
• The equipment needed
• Keeping yourself safe
• Health and Safety issues – recording them
• Recording information
• The Inventory:

Style and efficient design

Content

Layout

Descriptions and language

Disclaimers

Photographs and DVDs

Appliances

External areas

The finished product

• Updating the Inventory
• Checking a Tenant in and out

So, what’s new?

Inventories are not new, nor are the obligations to record the condition of a property prior to move in and immediately upon move out. The industry has demonstrated mixed standards across the UK and it has been hard to define ‘best practice’.

Inventories are not compulsory in a residential letting.

The Government introduced Tenancy Deposit Protection (TDP) and Alternative Dispute Resolution (ADR) amid complaints from tenants and consumer groups that landlords frequently withhold deposits unfairly.

A properly constructed inventory and ‘check-in’ and ‘check-out’ procedure will always improve clarity and reduce disputes as both parties to the contract have a clear starting position.

The vast majority of agents have excellent procedures in place, though standards may vary more across the landlord market. However, many are finding their inventories and procedures subject to external and independent adjudication and significant numbers face paying awards to tenants. Higher standards are therefore now required.

The Law

Legal Framework

There are numerous laws to follow and since 2007 there has been a legal framework around the handling of deposits for assured shorthold tenancies. These rules are contained in the Housing Act 2004 and the regulations that arise from this. They were significantly amended by the Localism Act 2011 and the Deregulation Act 2015. The legislation covers not only the landlord holding deposits but also controls the actions of the schemes.

Civil Law

Examples: of civil law make up much of the Housing Act 2004 and the Landlord and Tenant Act 1985 (dealing with repairs). In these cases, there is no “offence in not getting the date right” on a section 21 notice; your claim for possession may simply fail. Tenants may make claims for compensation where they suffer a loss as a result of the landlord’s failure.

The Housing Act 2004 which introduced deposit protection in April 2007 extends this and allows a tenant to claim a penalty, even if they have suffered no loss. For example, the landlord must comply with the initial requirements of a deposit scheme within 30 days of receipt of the deposit. The tenant does not have to show that they suffered a loss in order to claim the one to three times the deposit penalty, only that the landlord did not follow the legislative requirements.

This has created something of a “self-policing” system as it is in the tenant’s interest to check if the landlord has been doing this right.

Common Law

This is the default position where nothing else is specifically agreed. It is the basis of the fact that the deposit money belongs to the tenant throughout the tenancy. Many landlords forget that the deposit they hold is legally owned by the tenant, not the landlord. This is why it is up to the landlord to prove any claim on the deposit to justify why an adjudicator should deprive the tenant of money they own. With sufficient evidence, the money will be returned to the tenant. It is a bit like the legal principle of innocent till proven guilt. It is the tenant’s money unless the landlord can prove otherwise.

One of the most important principles to grasp from common law is the tenant’s right to fair wear and tear. This means that carpets wear out, walls will eventually need repainting, appliances will break down with age. None of these are chargeable to the tenant.

Tort

If the landlord engages an agent who arranges an inventory, in house or outsourced, the landlord has the reasonable expectation that the inventory will be of a “reasonable” standard. Tort is where the landlord feels the agent has let them down on a “reasonable expectation” and the landlord suffers a loss as a result. Obviously, nothing will be 100% clear but if someone is employed to do the inventory it would be reasonable to expect a certain minimum standard of performance. Failure to meet that expectation is the cause of many disputes.

The Law of Contract

The tenancy agreement is a contract and the inventory is normally collateral to it (the tenant promising in the tenancy to return the property in the same condition as the check-in inventory, fair wear and tear accepted). This means that right at the heart of inventories lies contract law. Following the normal evidence of a contract is therefore necessary for enforcement of your contractual rights through the inventory.

If the tenant fails to comply with the tenancy/inventory, the remedy is for breach of contract. This is important as it limits what can be claimed. In order to claim from a deposit, the landlord will have to show they have suffered a loss and the claim can only be to put the landlord back in the same position they would have been in if the tenant had complied with the contractual agreement.

For example, if the tenant rents a brand new flat for two years and on move out the carpet is damaged (presuming the need to change it), the landlord cannot charge for a new carpet as the tenant was not required to leave a “new” carpet but rather a carpet that was two years old. If the carpet was estimated to last 10 years then the tenant could not be charged more than 80% of the value of the carpet. This would represent eight years’ loss out of the estimated ten-year life expectancy, the other two years being “fair wear and tear”. Deposits and inventories are not done on a “new for old” basis as is common with insurance.

It is also important to understand that a landlord can only make a claim where he/she suffers a loss. For example, if the tenant’s child crayons on the bedroom wall, but on vacation that room is going to become a kitchen as the house is being converted into two flats, then the landlord will not be entitled to any compensation. This is because the action of the tenant has not caused the landlord any loss due to the works being done anyway. No loss, no claim. This can make it tricky where the landlord wants to charge the tenant but not do the work.

Inventory Providers

Inventories are typically done either “in house” (by the landlord or agent) or they may be outsourced to another company. Each system has advantages and disadvantages.

If you are going to use an external inventory provider (external to the landlord, so this could include the agent), it is important to be clear what service they will be giving. This is because the inventory and offer may vary quite a bit between providers and so understanding what you are expecting to receive is critical. For a simple example, with some they may only deal with the inventory while with others it may include the check-in and check-out. Find out exactly what you are paying for. The terms of business with the third party should identify the service, as per some suggestions below.

What do the Terms of Business say?

1. Details of service provision
2. Cost
3. Timescales
4. Not included in service provision
5. How do the parties cancel?
6. Complaints procedure

Why Duty of Care?

An independent inventory provider may have no direct contact, contract or relationship with the landlord or the tenant, but he/she does nevertheless have a duty of care to the parties. Included are the following:

• To act professionally
• To be honest
• Unbiased and independent
• Competency commensurate with the task
• Confidentiality
• No conflict of interest
• No right to delegate tasks or responsibilities
• No secret profits
• To risk assess the process

Negligence

The reason agents and inventory providers carry professional indemnity insurance is to cover the business and staff for negligence claims. All professionals face the potential of being sued for mistakes; damages awarded can be expensive. For a party to prove that the professional has been negligent the following must be demonstrated:

• That a loss has taken place
• That a duty of care was owed
• There has been some breach of liability and/or duty of care

The inventory provider is the one person who will be expected to carry out a detailed inspection of the property. The provider is under a duty to make observations for the agent and landlord and be aware of the obligations the parties have towards each other and the tenant. Risk assessment is the key.

Liabilities

In addition to the liabilities owed to the person contracting for the inventory, the inventory provider will have a liability to the occupiers of the property (not to damage or put them at risk) and to the landlord, if instructed by the agent.

Those instructing inventory providers can also have a vicarious liability for the actions of the inventory provider. An example of this would be the agent failing to employ a quality inventory provider leaving the agent liable for any errors they might make.

Does the inventory provider have any rights?

External inventory providers have some rights too and these should not be overlooked. The better the quality of the agreement with the provider the better these issues can be managed.

• To be paid for work done
• Health and safety on site
• Refund of expenses
• Contractual rights and benefits
• Necessity (emergencies) implied authority

Risk Assessment – who is responsible?

Landlords running a rental business will have responsibilities for the safety of anyone they engage, even if they are independent contractors. This is because under section 3(1) of the Health and Safety at Work Act 1974 the law requires that the business is run in such a way that “those not in your employment” are not put at risk. This is a wide definition.

Therefore, if there are known hazards at the property it is essential that this is discussed and provided for in the agreement for the inventory provider’s work. To help the landlord, the inventory provider should be able to feed back issues they are aware of from their work. The agreement with the inventory provider should make it clear that they need to risk assess the property on arrival as, particularly on a move out, they will not know what condition the property is in.

Safety requirements

Generally speaking, no one makes a detailed inspection of a property in the same way as an inventory provider. Such a person may not be an expert in health and safety matters but must be competent.

Apart from statutory requirements like gas safety, bunk beds, fire safety in soft furnishings, plugs and sockets and electrical, the inventory provider should be have knowledge of the requirements of the Housing Act 2004 in relation to The Housing Health and Safety Rating System (HHSRS) and the smoke and carbon monoxide alarm legislation.

The statutory requirements should be covered in the pre-let professional testing, such as gas and electrical, but soft furnishings and general safety could fall back on the inventory provider. If the inventory preparation is outsourced, make sure the responsibility is clearly denominated.

The inventory provides a huge opportunity to show how the landlord is aware of, and complaint with, various safety legislation. For example, the Plugs and Sockets Etc. (Safety) Regulations 1994 make it a legal requirement for any plug in a rented property (supplied in the course of a business) to have insulated live and neutral pins. In preparing the inventory this information should be noted for each appliance with a plug so that a) it is checked and b) there is evidence of the check.

The inventory provider should carry out a comprehensive examination of the property and report any items that are unsafe or potentially unsafe. If such items are a threat to the safety of the inventory provider, they should abandon taking the inventory until the property or item has been repaired. If they are serious but not a threat to the inventory provider, then the inventory provider will need to report the matter later.

It is really important for the inventory provider not just to note in the inventory that something is defective but if a safety issue, this should be specifically reported to the person commissioning the inventory to ensure it is actually fixed before the property is let. Although there is no actual law requiring the inventory provider to do this, if they fail to, someone else will need to visit the property to ensure it is safe. Cases running to hundreds of thousands of pounds in compensation have been awarded where there are unresolved safety issues in the property. All of the following have implications for consideration and show the high level of knowledge needed to complete a high quality inventory.

• Consumer Protection Act 1987
• Gas Safety regulations
• Electrical safety
• Fire Safety (Regulatory Reform Order (Fire Safety) 2005 and the Nation Fire Safety Standard. Smoke Detectors act 1991
• Furniture Safety
• Statutory Repairing Obligations
• Housing Health and Safety Rating System (HHSRS)
• Houses in Multiple Occupation

Someone will have to carry out a general risk assessment as to the safety of the property prior to the check-in. Though the law does not say there has to be written evidence of this, without written evidence it may be hard to prove it was done. A fire risk assessment is a legal requirement for bedsit type houses (where there are different agreements for different parts of the building, including blocks of flats). Whilst not a specific legal requirement in a family home, it is clearly good practice. This may not be the responsibility of the inventory provider, but that person is probably the one who will take the closest look at the property. To fail to note anything that might be a risk to the tenants’ safety and not deal with it would be a serious matter.

Crucially, the inventory is the one main document that the landlord should be able to rely upon in Court to evidence the fact that the property was safe immediately prior to the tenant moving in. It is the ‘paper trail’ and is signed and accepted by the tenant at or around check-in; it will be hard to refute it.

Some areas for consideration:

• Fire safety
• Trip hazards
• Damp and mould
• Heating
• Electrical plugs, sockets and appliances
• Non-safety glass
• Smoke and carbon monoxide alarms
• Stair rails
• Falls from heights
• Ventilation
• Access to meters and services and isolation controls
• Food safety
• Locks (especially windows)
• Stored water (tanks and shower units)
• Structure and roof
• Ponds and external hazards

The role and purpose of an inventory

The inventory is part of the contractual documentation that records the detail of the property to be let. It provides an evidence trail of the landlord’s care in providing a safe property and records the condition of the property and any fixtures and contents. The tenancy should clarify responsibilities and tenants’ liabilities in relation to returning the property to the landlord, fair wear and tear accepted, in the same state and condition as listed in the inventory.

The inventory is often used as a receipt for keys and important documentation relating to the property. It provides the major demonstration of due diligence in respect of safety and other legal issues.

A well-constructed, agreed, inventory should remove uncertainty about the condition at move in and can over time provide a history of the condition of the property. Once signed and agreed it is legally binding on both parties. Areas needing additional information may be supported by photographic evidence

All of the above should help the landlord survive any deposit dispute.

Independence and accuracy

It should be an impartial and factual document, fair to both parties. Impartiality is often perceived by the deposit schemes as a major advantage of using an “independent inventory provider”. Having said that it is hard to argue total impartiality when only one party is paying the bills! A tenant has peace of mind knowing that the starting position is recorded and may be less likely to argue it because of the strong starting evidence. The condition of the property will be different when the tenant vacates. The question then arises – who is responsible for any changes in condition?

The record of the move in condition will remove uncertainty between the parties, assist in dispute resolution and reduce the risk of an unsatisfactory end to the tenancy. An inventory is regarded as the safest and most effective way of recording, agreeing and proving move in condition.

What should be recorded in the Inventory?

What we often call an inventory is really a combined inventory and schedule of condition, i.e. it not only lists what is there but states the condition as well. The inventory will give a full description of the property (the tenancy agreement usually just states the address) along with a detailed record of the condition of the property (inside and out). It will list of all the contents of the property and the condition of each item. Inventories also typically identify the location of meters, stop cocks and mains electric fuses/board. As discussed above it can help identify safety issues (items checked and information provided) along with move in meter readings and details of the keys that have been provided.

Who takes the inventory?

The inventory can be handled by the landlord, the agent or an independent inventory provider. As stated, the inventory should be an impartial document regardless of who provides it. Many agents who do not sub-contract this work nevertheless employ dedicated staff for this function. It is preferable for this work to be undertaken by someone other than the person who is responsible for the day to day management of the property.

Guidelines for the inventory provider

Whoever completes the task it is important that enough time is allowed for a thorough job. As this will often involve working alone in the property consideration should be given to “lone working issues”. It is not unknown for people working with inventories to have an accident or to get locked in a room. Make sure someone knows where you are and when you are due back. Consider also if there is a mobile signal in all areas of the property. Make sure the person doing the inventory has the necessary equipment. In order to have a consistent standard it can help to have a check list of procedures (the order of rooms, the order in which things are listed in a room, do you do inside or outside first, etc). Whoever does it needs a methodical approach with an eye for detail and the confidence to be independent and not swayed by opinion.

Health and safety policy

Some of the issues to consider are:

• Will you inspect loft area and cellars?
• Will you move heavy furniture?
• Will you enter rooms or areas without light?
• Potential hazards?
• Aggressive pets if the property is occupied?
• Will you climb to reach high items?
• How will you record the condition of the tops of cupboards?
• Will you lift mattresses?
• Is this a suitable situation for a person alone or should two attend?

Be practical and safe

• Try and work in daylight hours
• Record the weather conditions
• Ensure those who need to know are aware of your visit
• Do not enter without knocking
• Check the whole property is unoccupied before you commence
• Secure your entrance and exit
• Check phone signal and ensure your mobile is with you at all times
• Check the power is on
• Make sure you have your kit (detailed below) and all keys
• Be careful about opening the door to callers
• Tell someone else how long you think you will take

Keep yourself SAFE and do not take unnecessary risks

What equipment do you need?

This will vary depending on location and the level of service you provide.

The following is a list of the basics and their uses:

 

Personal ID	To establish your right to be there
Dictaphone/digital recorder/laptop/PDA	Recognised to be the most convenient method to record the data
Torch	Often dark areas
Writing pad and clip board	Always needed for note taking
Keys	To test each lock
Meter keys	For locked meter cupboards
Pens and spare batteries	Saves time
Tape measure	Helps with sizing marks and damage
Mirror	Great for inaccessible corners
Some tools like a screwdriver or knife	Good for water meter covers
Camera	Digital is best
Compass	To describe walls i.e. ‘north wall’
Wet wipes and or cleaning gel	Essential for hands and useful to wipe marks
Gloves	For protection against infection where required
Mobile phone	Primarily for safety
Device for checking smoke alarms (e.g. long bamboo pole to press the “test” button)	You need to test them
Boots and rainwear	For the garden on wet days
Shoe covers	To protect the carpet from your feet
Tool box or bag	To keep your kit in so that it’s always ready

 

Recording information

Timing

The inventory is a record of the property immediately prior to a tenant moving in. Timing is crucial.

Where the property is not ready, the inventory process should be placed on hold. Where this is not possible the inventory provider must reflect unfinished issues in the inventory i.e. ‘curtains not hung’ or ‘cooker not wired in’.

Where there is a delay in the tenant taking possession, the inventory may have to be rechecked as dust and cobwebs may have accumulated, grass may have grown and so on.

Recording your notes

Voice recording is the simplest and most efficient method although some inventory providers write straight into a template or a laptop. Some take manuscript notes. Use of abbreviations is acceptable but should not be overdone. If the abbreviations go into the final document, an index will be required. Abbreviations generally make it harder to work with an inventory than full text entries, particularly for those less familiar with the abbreviations, such as the tenant, the courts or adjudicators. There is no quick solution and there is no substitute for thorough and detailed notes.

Notes need to record the room or item by giving a full description, then a record of the present condition including smells where necessary i.e. smells of smoke or pets, cooking.

Repetition can be avoided by the use of general descriptions.

IT Solutions

There are a number of products including web base solutions for inventory provision. Depending on budget and skills some options can speed up the process and help with consistency. However, in deciding what to use, regard must be had for the capability of the system to produce evidence or documentation that can be used at an adjudication.

Photographs and DVD’s

Photographs are not essential in law but are really helpful to support an inventory and are therefore recommended. However, photographs are not a suitable substitute for a written document. Imagine how many photographs are required to record the condition of just one pair of lined curtains with pelmet and curtain rails! The same could be said for a DVD, although a DVD with a ‘talk over’ soundtrack may help. DVD/Video evidence is admissible at Alternative Dispute Resolution, but not easy to manage. Landlords are losing out at adjudication because of poor photos or hard to interpret DVD’s.

Photographs will show the general condition of a property, setting the scene, and identify items (particularly helpful for items difficult to describe). They are useful on move-out where you wish to show damage. A comprehensive set of photos for the garden and exterior will save recording time and is an area where they are most useful.

Evidence procedures for photos

Where the intention is to rely on photos or a DVD later, copies must be supplied to the tenant on move-in so allowing the tenant to verify them. Failure to do this will make the evidence inadmissible. It is essential not only to do this but to be able to prove you gave the tenant a proper opportunity to verify and agree your evidence prior to move-in or within a ‘cooling off period’ after move-in.

Take a logical and consistent approach

Develop your style and stick to it. Most inventory takers start at the front door and follow this method:

• Hall
• Cloakroom and under stairs area
• Sitting room
• Dining room
• Study
• Kitchen
• Utility
• WC
• Stairs and landing together
• Bed 1, then 2 etc
• En-suite
• Family bathroom

Perambulate the rooms the same way, i.e. clockwise, remembering to look up as well as down. Name the rooms and use terms like ‘north wall’ or ‘internal or external’ to identify each side of a room. Start with the ceilings, then the walls, then the woodwork, doors, windows and features, floor covering then furnishings and fittings last. Have a policy of listing doors; for example, list all doors from the hall or the room you go through to find them. Otherwise the inventory might list doors in the hall and doors in each room and you would be “double counting” the number of doors in the property.

Through rooms

Decide where these rooms naturally divide and split your description i.e. ‘dining area’ and ‘kitchen area’.

Descriptions

The fabric

Always use plain English and avoid technical terms. Also avoid manufacturers’ descriptions and stick to the regular terms. Use the right word, and if in doubt find out. For walls and ceilings, you need to describe the surface finish and the type and colour of the paint or paper. The same goes for the woodwork i.e. skirting, door and window frames, panel door, flush door, sash window, transom window, uPVC, wooden or Critall. Clear or opaque glass, window catches, locks, door handles and so on.

Where the exact material is unknown, use terms like ‘wood effect’ or ‘silver in colour’.

Fitted rooms – Bathrooms and kitchens

These are difficult areas where it can be tempting to generalise. Don’t! You must describe every kitchen unit individually, both inside and out. Take a logical approach and do not omit the appliances, worktops and tiling, plus sink fittings. For bathrooms, particular care should be taken over the sanitary ware as this is often an area for dispute.

Electrical fittings

Light fittings should be described as should heaters, fans, power points and switches. Test lights and bulbs where possible. Look for damaged sockets, unsafe plugs and leads and signs of any DIY wiring. Remember damaged sockets are illegal in a rented property so any damage should be rectified rather than just noted. Record what you find.

Curtains and furnishings

Describe curtains as well as curtain tracks and poles. Count the rings and tie backs, describe the linings and nets. Furniture must be accurately described i.e. fabric or leather sofa, the colour and pattern, cushions, tables, chairs, wardrobes, beds, remembering rails, bed heads and the materials they are made of, including the colour.

Removable contents

This can be the most tedious, but there is no substitute for accurate listing. Count the cutlery and crockery and take photos of items like paintings and valuable ornaments. It is in doing this job you realise why it is more attractive to let a property with as little in it as possible!

Central heating and radiators

These must all be recorded including the location of radiators, the boiler and any hot water cylinder. Thermostats on radiators should be described, as well as any tanks, and are they lagged? Timing and heating controls should be located and described as well as instructions given as to use.

Appliances

Make, model and where possible serial number are the minimum requirements. Is it gas or electric, solid fuel, multi fuel or a combination of these fuels? Describe the interior as well as the exterior. List shelves in fridges as well as internal lights, drawers, cooker racks and grills, rings, built-in or free-standing, knobs, isolating switches, baskets, and egg trays to name but a few

Cooker hoods, flues and cleaning requirements are essential, as well as details concerning washing machines and dishwashers.

External areas

It is helpful to have an understanding of the landlord’s requirements in this regard. For instance, if it is just an investment property they may be more relaxed about the garden but if this is the landlord’s own home while going abroad for a couple of years, there may be more detailed requirements and this may dictate that the most attractive course of action will be for the landlord to retain their own gardener.

Garden

Record the front garden first, then the sides ending at the rear. Photographs help with the gardens but must be comprehensive - general views will not record the detail required in a dispute. List movables like ornaments, pots, patio furniture and BBQs. Outside lighting and water taps should be tested and listed. Record washing lines, aerials and satellite dishes.

Garages and sheds

A general description of the construction, the inside and outside is required including flooring and electrical fittings. Be wary of contents in these buildings – they may have non-compliant furniture, plugs, sockets and unsafe electrical items that should be removed.

Boundaries, drains and tanks

It is important for the tenant to know which boundaries are their liability. If the property is not on mains drainage, how does the private system work – does it need to emptied by the tenant and are there restrictions on chemical use? Oil tanks must be measured for fuel as well as being outlined on the inventory.

Operating and safety instructions

Decide if you need to supply operating instructions for any item supplied. As a matter of law, you must of course supply safety instructions for all electrical items supplied. List all of these on the inventory so that if they are not returned and you have to expend time replacing them, the tenant can be charged the reasonable cost of doing this task.

Recording condition

Describing and listing everything at the property is only part of your job. Recording the condition is an essential part of the process. In some ways this is also the most challenging part. There will be a separate column on your finished inventory and you will now be recording data for that purpose.

As you go around the property taking the description, record the condition of each item as you find it. Record what you actually see and not how it might be ‘when the cleaners have finished’.

 

Use words like Scuffed Scratched Marked Indented Chipped Torn Discoloured Faded Dirty marks Stained Broken Not working New (when it is new) As new (when it really is as new) Screw holes Peeling Cracked Silvering (mirror)

Avoid or limit words like Clean Dirty Fair condition Average condition Poor condition Grubby OK Not OK Few Many New (when it is not brand new) Slightly/moderately/very worn (unless defined or consistently used throughout the inventory) Note: Terms like clean and good condition could be used as part of the introduction or if qualified and used consistently.

 

Locate the condition

Always say where the marks are i.e. carpet stained just to the right of the radiator in the hall. Measure marks and stains where possible. This is an area where photographs can help a great deal in describing and locating damage. Count the marks or burns or holes and where there are a lot, say it is an approximate number. Identifying location by ‘north/south wall’ is helpful.

Meters, stopcocks, keys and alarms

Locate and describe meters, stopcocks and alarms. Take serial numbers and record meter readings. Make sure you have a complete set of keys and record them on the inventory before they are handed over.

Dates

When taking the first inventory, find out and note down the age of every item where possible. This will be for your own records but will become vital information when later calculating any damages claim (i.e. how old was the item at the start of the tenancy).

The inventory

When you have completed your note taking you are ready to compile the document. The finished style is a matter for individuals. Some print in landscape to give wider margins and some in traditional portrait layout. Print in duplex (both sides) where possible as this reduces fraud and paper consumption. Number the pages, creating a line for signature at the foot of each page.

The inventory will also need to include a general introduction and set out the parameters. It will also explain how the tenant may point out discrepancies and the wording for this will depend upon whether you accompany the tenant on move-in or not.

Move-In

Accompanied check-in

Some advantages

• The tenant checks the inventory in the presence of the agent/landlord, approves and signs it as an accurate record of condition.
• Any queries are dealt with and should be resolved there and then.
• Tenant is responsible for the property from that point.
• Instructions and explanations are given on operating heating and the like.
• Removes the opportunity of later denial of the accuracy of move-in condition.
• If the appointment is handled well it could establish a good relationship with the tenant.

Some disadvantages

• The tenant may not realise the importance of this appointment from the tenant’s point of view and not give it the attention it deserves.
• Can place the tenant under pressure to agree.
• Can be stressful for the tenant on move-in day.
• Can be confrontational if an item cannot be agreed.
• Takes up time going over facts that have already been established. A line by line check of every item and the photographs can take a significant time.
• Some issues cannot really be checked until the house is lived in – i.e. washing machine cycles, cooker timer and so on.

Unaccompanied check-in

Some advantages

• Allows the tenant to check the inventory in the tenant’s own time and without pressure.
• Tenant gets to live in the house for a few days to discover its quirks/faults.
• Frees up time.
• Queries can be resolved in a given time period.

Some disadvantages

• Tenant damages property on or after move-in and claims damage was pre-existent.
• Tenant refuses to sign inventory.
• Tenant fails to check the inventory.
• Tenant may subsequently claim the property was not clean on move-in.
• Agreement may not be reached on move-in condition.

Always get it signed!

This is particularly important. For unaccompanied move-ins (and many do it even for accompanied move-ins), it is common to allow the tenant say seven or ten days after move-in to check the inventory, raise queries, suggest amendments, sign and return it (‘cooling off’). The agent must inform the tenant of the importance of checking the inventory and the possible consequences of failing to do so.

Once this stage has been achieved, both parties can relax and know that the starting facts have been established; all that remains is to keep the documentation up to date and in readiness for the move-out.

Visits to the Property

Inventory providers always visit the property in advance of the move-in, some during move-in, some during tenancy and some on or after move-out.

Key Question – has consent been obtained to enter the property? Remember the property may be in the possession of a tenant during one or more of these visits.

Most agents visit mid-term. If the term ‘periodic visits’ is used, the agent may not then be in breach of contract if a visit is missed. Best practice would also indicate that a visit should be made when it is deemed necessary - that could vary from property to property.

Periodic visits are important for a number of reasons:

• To check the property, establishing if any repair/refurbishment is required.
• To check for encroachment or problems from neighbours.
• To see if the tenant is in breach of any of the tenancy terms.
• To give the tenant a face to face opportunity to raise any matters.
• To see if any updates/changes are required to the inventory i.e. a new appliance has been installed.
• Is it still a safe place to live?
• To look for problems for which the landlord is liable such as under the Defective Premises Act or Occupiers Liability Act.

Arranging the visit

Regard must be had for the tenant’s legal right to quiet enjoyment.

Where the parties are in dispute, it is wise to take a colleague as a witness to any discussion. On a similar vein there is the potential for issues if a male agent visits a property where the tenant is a lone female and vice versa.

Access denied

Some tenants will deny access or simply ignore the request. In this event, reference should be made to the contractual agreement regarding access. However, statute law always prevails and the tenant is within their legal rights to refuse access. Sensible negotiation should alleviate this issue, and as a last resort, the agent can state that any loss incurred because access is denied, will be reclaimed at the end of the tenancy. Do not use force to enter – even if tenant may have abandoned the property.

Key issues for mid-term

• Are any non-permitted occupiers present (look for the evidence)?
• Checking contractor’s work carried out since the last visit.
• Is the tenant smoking in the property in the absence of consent (look for the evidence)?
• Are there pets allowed (look for the evidence)?
• Has the tenant damaged the property or made any unauthorised additions or alterations?
• Does the tenant want to stay beyond the end date?
• Checking for repairs and general property management issues
• Asking if there are any encroachments by neighbours.
• Noting the date, time and weather conditions.
• Reporting to the landlord.
• Following up where necessary.
• Written report

Move-Out

Unlike the check-in, the check-out is very much the agent or landlord’s responsibility. Clearly check-out is potentially more contentious but it is vital to be able to carry out a thorough move-out report. This is done by comparing move-in condition (recorded in the inventory) with the condition on move-out. The options for the agent are to carry out the check-out report with the tenant, or wait until the tenant has vacated, then carry out the final inspection. The key point to understand on the check-out is that you are there to agree the condition of the property, not to apportion blame. In order to make this point it can be helpful to note something on arrival (like the exterior paintwork) that needs the landlord’s attention and to start by noting this on the inventory. The tenant’s reaction will probably be to say it is not their fault or responsibility but this gives the opportunity to explain that the purpose of the visit is to agree the condition and not to say who is liable. If you can see a burn mark and the tenant denies seeing it you can take a photo and note on the inventory that “tenant not able to see burn, see photo 23”. The tenant can still agree to this statement even if he is denying the burn mark.

Pre move-out visit

There is a strong argument for carrying out a pre move-out visit. It will not be possible to check the condition of the property with the tenant in possession, but it can be a good time to point out to the tenant matters that will need to be addressed on or before move-out. Many tenants appreciate this as some are unclear about the extent of the cleaning and gardening required or whether or not the windows and carpets should be cleaned.

Accompanied move-out advantages

• Move-out condition may be agreed and signed by both parties.
• Agreement may be reached on liability for damages and missing items.
• Issues are identified even if not agreed.
• This is a forum for resolving disputes.
• Everything may be settled on the day.

Disadvantages

Tenant may refuse to be present or refuse to stay for the whole appointment.

• Can be frustrating for the tenant who has ‘moved on’.
• Tenants can pressurise or distract and even ‘hide’ defects.
• Can be confrontational.
• Agreement may not be achieved.
• Can be rushed at the risk of missing something important.

Unaccompanied move-out advantages

• Time to carry out a thorough check.

• Time to think and take landlord instructions before discussing with tenant.
• A move-out report can be produced without pressure.
• Gives more time to discover latent defects i.e. fleas!
• It is easier to take photographs of damage in the absence of the tenant.

Disadvantages

• May delay agreement.
• Tenant may dispute findings, like the tenant denies the damage was there when they moved out and it must have happened since. This can be a particular problem if the landlord goes into the property before the inventory, a situation to be avoided if possible.
• It may be hard to find items relocated by the tenant.

The key to move-outs from the agent’s point of view is to record the exact detail. The property can then be made ready for reoccupation and the agent is in a position to formulate a claim, if necessary, against the tenant for damage or missing items.

In any event, the agent should be able at this point to identify the issues and seek the landlord’s instructions.

Move-Out Report

Following the check-out inspection, a report should be compiled. This should include a summary of the tenancy parties and dates, the date and time of the inspection and who was present. A summary of the findings should be given in accordance with the listed order of the inventory. Damage is noted as well as relocations, additions and missing items.

There should be no mention of liability at this stage and the descriptions used should, where possible, be consistent with the inventory wording.

The report is now available for the property manager to seek the landlord’s instructions and to reach agreement with the ex tenant.

Making a claim from the tenant

Reaching agreement with the landlord and the tenant as to the amount of a claim is often highly contentious. Liability can also be difficult to establish.

Liability

The tenancy agreement plus statute law sets out the parameters. Generally speaking, the tenant is liable to make good any damage caused and to cover the cost of wear and tear beyond reasonable (this is also damage). The tenant may also be responsible for missing items and relocating moved items back to the original location. The tenant is not however, obliged to improve the property or to leave the landlord in a better position at the end of the tenancy than existed at the start, nor is the tenant responsible for ‘dilapidations’

The landlord must make allowances for wear and tear and the landlord or agent cannot claim costs and personal expenses unless the tenancy agreement specifies this.

Assessing fair wear and tear

Whose job is it?

Assessing wear and tear varies between property and the following factors must be taken into account:

• Condition of property on move-in and move-out
• Age, quality and condition of property when originally let
• Number, age of tenants in possession and permitted occupiers
• Length of the tenancy
• Use
• Terms and conditions of the tenancy i.e. smokers, pets
• Age, style, quality, lifespan and intended use of items
• Ignore betterment (this is something that would put the landlord in a better position than he should have expected to be in, e.g. a tenant redecorating a room)

The original age of an item or date of redecoration is vital in making an assessment (this should have been recorded in the original inventory provider’s notes).

Depreciation guides are available and the Rent Service provides a guide that is acceptable in court. Here are some examples:

 

Central heating boiler Washing machine/dryer Cookers/hobs/ovens Refrigerators/freezers Mowers Furniture	10 – 20 yrs 3 – 5 yrs 4 – 8 yrs 5 – 8 yrs 5 – 8 yrs 5 – 12 yrs
Carpets Soft back Felt back/medium quality High quality	3 – 5 yrs 5 – 8 yrs 10 + yrs
Decorations Living rooms Dining rooms Kitchens and bathrooms Bedrooms Hall, stairs, landings	Up to 4 yrs Up to 5 – 6 yrs Up to 3 yrs Around 5 yrs 3 – 4 yrs

 

Clearly, these guidelines are just that. Assessments must also take into account the suitability of the location. Bedroom carpet fitted on a landing will have a much shorter life. A cheap laminate floor will not have the life of a solid wooden floor, and cheap vinyl is probably unsuitable for a heavily trafficked kitchen. Similarly, a reconditioned cooker or fridge, although ‘as new’ will have a shorter life span.

Damage

Where damage has occurred, regard must be taken for the quality and suitability of the item as well as the age. Is the item repairable or must it be replaced? A carpet may be heavily stained and cleaning is ineffective. A replacement carpet can be claimed, less fair wear and tear.

A problem will arise when an item is beyond its natural and accepted lifespan but is still serviceable and usable. Whilst a claim can be made, in truth the item no longer has a value and the owner has no quantum (value) in the claim; it must simply be written off.

Cleaning

What can be claimed from the outgoing tenant? The guidance on unfair terms in tenancy agreements says it is not fair to require a property to be “professionally cleaned”, though it may be OK to require it to be cleaned to a professional standard. This is specifying what is achieved rather than how it is achieved.

Relocation of contents

It is possible to claim the cost of moving items back to their original location. However, this is an area where a pre move-out check will avoid this.

Missing items

These can always be reclaimed, less depreciation.

Diminution in value?

It may not always be appropriate to replace or repair damage. In such a situation the landlord may claim financial damages. A bath may be scratched and this may lead to the replacement of the whole bathroom suite. The landlord cannot claim the whole cost but would be entitled to a contribution based on the reduction in value of the damaged bath. The same may apply for a small burn on a carpet. This may be irreparable but does not necessarily mean the landlord can claim for a new carpet (even with depreciation). Diminution in value will be a fairer assessment - the carpet may be perfectly acceptable for a re-let. However, some adjudicators will not accept this as a valid claim and it will probably fail in a dispute.

Abandoned Possessions

What may the tenancy agreement say?

• Tenant should be given reasonable time to reclaim
• State it will be held for a certain time
• Give tenant a time limit to collect
• State how and when you will dispose of any items and the financial consequences

The tenancy agreement is silent?

• Notify tenant and provide a reasonable opportunity to recover
• Keep good for three months
• Dispose of if not sold
• Keep net proceeds of sale for six years

Torts (Interference of Goods) Act 1977 deals with the situation where one party is left in possession of another party’s possessions without an agreement about holding them; this is called and “involuntary bailee”. There are two sets of circumstances in the legislation, the first being where goods are being held against a debt. For example, a garage fixes a car and the owner is not able to pay. The garage is an involuntary bailee and as they are holding the good against a debt, they must give three months’ notice of the intention to dispose of it. This is not so common in rentals as the goods are not generally held against a debt.

More common in rentals will be the second situation where there are tenant goods left in the property, simply because they were not removed by the vacating tenant. In this case “reasonable” notice is all that is required. Reasonable will vary based on how many things needs to be moved so, for instance, if there are only a couple of boxes of possessions the notice might be shorter than if the tenant would need to arrange a removal lorry to retrieve their possessions.

Be very careful as it is not unknown for tenants to claim one of the black bags was not rubbish it was full of Gucci suits (or similar). It is recommended that everything left is photographed and listed clearly to avoid this danger.

Insurance claim?

Damage may be covered by the landlord’s insurance; an item may be under guarantee or a legitimate claim may be made against a third party. The tenant may also have insurance cover for some matters. Whilst there is no statutory requirement for a landlord or tenant to seek their own indemnity, the agent should always examine this possibility as it can be an efficient way to avoid a dispute.

Making a Deposit claim

Housing Act 2004

The Government introduced Tenancy Deposit Protection (TDP) and Alternative Dispute Resolution (ADR) amid complaints from tenants and consumer groups that landlords frequently withhold deposits unfairly.

• Protects tenant’s deposit
• Provides insurance to tenant (Insured schemes)
• Stakeholder
• Scheme rules:

There are three scheme providers and they each have slightly different rules. It is important to understand the rules for whichever scheme you use. The three providers are:

• DPS: The Deposit Protection Scheme
• MyDeposits
• The Dispute Service

Adjudication

ADR is expensive for the deposit schemes; each scheme will operate a pre-adjudication procedure to see if it is possible to resolve the dispute without going to formal adjudication. The pre-adjudication can be binding on the parties if they agree and clearly the schemes will advocate this procedure in smaller value disputes. If no agreement, is reached the dispute will be referred to the adjudicator allocated for the case.

ADR can remove some of the often protracted correspondence, meetings and conversations in trying to help the parties reach agreement, particularly where the dispute is contentious and feelings are running high! ADR offers a non-contentious way forward if the parties agree.

The downside is that it can be slow and some say ‘inconsistent’.

Consider the strength of your case before going forward with ADR if the case is weak.

Important principles:

• The process is not punitive – it aims to restore the position
• The landlord must make a case; the burden is on the landlord
• The deposit belongs to the tenant and not the landlord
• Evidence must be presented
• No inspection is made by the adjudicator

Rules of evidence

The agent must use experience and professional skills in examining the evidence and assessing the tenant’s case. If best practice has been adopted on the move-in, record keeping and managing the tenancy and the move-out, it should be relatively easy to assemble the case for ADR.

The agent will need to submit the following (some of these are specified by the schemes):

• Copy Agency Agreement (Terms of Business)
• Tenancy Agreement and any notices
• Copy Move-in Pack (if supplied)
• Signed Inventory and Schedule of Condition
• Move-in photos
• Relevant mid-term visit reports, file notes and correspondence
• Copy move-out pack if supplied
• Move-out Report
• Schedule of claim with copy third party invoices
• Report of any additional comments

 

If any of the above cannot be supplied, the agent will need to explain why. All documents must be legible, clear and capable of interpretation. Remember the adjudicator will not be visiting the property and is remote from the dispute. Stick to the facts. Take the time to present the documents in a folder annotated with a schedule and set out in date order. Give an explanation of any anomalies and attempt to address the tenant’s concerns where appropriate.

How to avoid ADR and how to win!

Develop best practice in the process of inventory taking, move-in procedures, record keeping and moving a tenant out. Refusing to let poor quality and run-down properties and investing time in setting up good procedures for delivering a better level of service. Employ really good communication skills and record keeping. Maintain an independent and professional approach to the inventory.

Remember “time saved” in poor inventory preparation and procedures, is rarely a true saving.

Miscellaneous Regulations

Copyright

• Who owns the copyright of the inventory documentation?
• Establishing copyright is easy! It defaults to who wrote it unless there is a specific agreement that it goes to someone else. This can mean that once an inventory is completed you have to stick to it unless you agree to buy the copyright at the outset. This might be worth considering unless you are confident about the long-term sustainability of the provider.

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