Property Management 101: The Inventory
April 20, 2011
A property management division deals with several aspects of the moving in, moving out and day-to-day processes in the lettings arena. Over the coming weeks I hope to guide you through many of these points by explaining some key things all landlords should consider before choosing a managing agent.
This week I will be looking at the inventory, which is a catalogue of the property and its contents, and a record of condition. At Young London the two are combined into one report, which is either called the inventory or the check-in report.
The inventory and check-in report has several functions:
- It provides a catalogue of the property being let
- It records the condition of the property and any items that are included in the tenancy
- It forms part of the legally binding contract that is set out in the tenancy agreement between the tenant and the landlord
Before April 2007, there was a more casual approach to inventories. The introduction of the Tenancy Deposit Scheme (TDS) at the time changed this and made an inventory a much more important act. It is now an important document for both the landlord and the tenant, as it is the key document in proving the condition of the property before the tenancy commenced.
At the end of a tenancy a good inventory will be able to identify, amongst other things, substitute or extra items and fair wear and tear. A good inventory will fully describe each item, quoting colour, size, model and serial numbers where possible in order to avoid problems at the end of the tenancy. Detailed photography of the property and its contents is highly recommended!
However common disagreements occur around the topic of what constitutes ‘fair wear and tear’. The Association of Residential Lettings Agents (ARLA) have provided guidelines on this matter of what to consider:
- The original age, quality and condition of any item at commencement of the tenancy
- The average useful lifespan to value ratio (depreciation) of the item
- The reasonable expected usage of such an item
- The number and type of occupants in the property
- The length of the tenants’ occupancy
Disagreements do happen, and in such a case these are now decided by independent adjudicators instead of being resolved through the courts.
If the landlord and tenant cannot reach agreement on the deductions from the deposit, the case and all supporting evidence must be sent to the Independent Case Examiner (ICE) for adjudication. A comprehensive report with supporting photos signed by the tenant and the landlord or their representative will ensure the ICE’ s decision is fair to all parties.
It has been estimated by a lawyer who acts regularly for landlords that currently fewer than 1 in 50 inventories are of an adequate standard to ‘stand up’ in court – illustrating that a professional inventory is essential to protecting your investment.