Property Management: the importance of regular inspections and an accurate, concise and detailed inventory

What is an inventory?

There are many definitions of an inventory for rental purposes but according to the AIIC (Association of Independent Inventory Clerks) “an inventory is a binding legal document that provides an accurate written record of the condition and contents of a property at the beginning of a tenancy”.

ARLA (the Association of Residential Letting Agents) on the other hand describe an inventory as “an absolutely essential document that provides a written benchmark, which should be amended, updated and recreated before the beginning of each new tenancy. A properly constructed inventory/schedule of condition details the fixtures and fittings and describes their condition and that of the property generally”.

Who needs one and why?

An inventory is a fundamental and essential part of a tenancy agreement and EVERY landlord should have one in place for each property that he or she rents out. The reason why an inventory is of such importance is simple: the document can be used to validate whether or not a tenant is entitled to a full or partial return of a deposit. Without an accurate inventory, a landlord has little or no evidence to prove that their property has been neglected or abused in any way, and therefore has no legal recourse to withhold monies lodged as a deposit.

Unfurnished properties: Is an inventory really necessary?

Within the lettings industry inventories have conventionally been associated with fully furnished properties as agents typically construct a list of the full contents of a property which normally includes items such as furniture, ornaments and kitchen utensils. However, many landlords/agencies seem to hold the opinion that if a property is unfurnished, they do not need to conduct an inventory because there is little that can be stolen, broken or damaged. In reality this is NOT a comprehensive stance as damage to an unfurnished property can prove just as costly to a landlord as a fully furnished one if a tenant fails to fulfil their obligations and maintain a property to the appropriate standard.

As a result I would strongly advise that at the commencement of EVERY tenancy all aspects of the condition of a property should be recorded and signed off by both parties (agent/landlord and tenant). These include: all walls, ceilings, doors, door handles, windows, window handles, floorings, skirting boards, light fittings, sockets and radiators/heaters in every room. Major fixtures and fittings in kitchens and bathrooms are also essential such as integrated cookers, hobs, extractors, work fronts/tops, toilets, toilet lids, sinks, baths, bath side panels, cubicles, showers and taps. Aside from this the overall internal cleanliness and external condition of any outside space/gardens are additionally relevant as the property should be expected to be returned in a condition of immediate re-let from the tenant. In doing this you are automatically making the tenant aware of your expectations and their obligations from the offset whilst minimising your risk for when the agreement comes to an end.

Case Study

In December we had a tenant who on vacating one of our properties had left the house in poor condition in comparison to how she originally found it. One of the carpets needed replacing due to an iron burn, a further two carpets required a shampoo clean due to being heavily stained and the house required a general clean to prepare it for the incoming tenants.

As a result we claimed the deposit monies for these costs through the scheme where the bond was lodged. As expected, the tenant in question disputed these costs so we had to go through the schemes arbitration (All deposits are either held in deposit protection schemes or insured through similar schemes, where they are independently arbitrated if there is a dispute between the landlord and tenant).

Luckily, we possessed a comprehensive inventory which had originally been signed off by us and the tenant on the day of the move-in. This stated that the carpets were originally in good order with no noted stains and that the house had been cleaned to a professional standard. This document in conjunction with additional photographic evidence of the damage meant that we were able to win our case through the arbitration process and as a result £548.50 of the £595.00 deposit was retained and used to cover these costs incurred by the tenant.

Mid Tenancy Inspections

Aside from the initial conduction of an inventory at the commencement of an agreement it is also extremely important to revisit your original documentation at regular inspections throughout the duration of a tenancy (every 6 month’s minimum). Mid tenancy inspections give you a great insight into how your current tenant is looking after and respecting your property. They also allow you to keep track of any issues which may need addressing sooner rather than later to avoid unsavoury surprises at the end of the tenancy.

In our inventories we use a numerical rating system to record the condition of each item and we additionally make notes which relate to specific issues. Each column has a 6 month and an annual section which allows us to reassess the rating of each item individually at each inspection. This format allows us to quickly and efficiently revisit all aspects of a property as we run through it room by room comparing its original condition to the current condition. The benefit of this system is that it ensures that any comparative changes are picked up and noted at the inspection which can then be addressed with the tenant and put right.

A typical outcome of an inspection where further deficiencies have been noted would be a course to action with the tenant (for example – if a house was generally untidy or a carpet had become heavily stained the tenant would be instructed to conduct or arrange a clean). Following this a secondary appointment would be arranged to check the required work had been carried out. By addressing such issues head on you can avoid further damage or deficiencies at your next inspection or at the end of the tenancy. By taking the time to conduct an accurate, concise and detailed inventory at the commencement of an agreement you really are ensuring that the power remains in your hands whilst safeguarding your investment.

This article is due to feature in March’s forthcoming edition of ‘Your Property Network Magazine’ and is following on from my last article titled ‘GETTING LHA PAYMENTS DIRECT! IS IT REALLY HAPPY EVER AFTER?’ Please visit www.yourpropertynetwork.co.uk for your free introductory copy today.

Yours Sincerely,

Aaron Phelan

Lettings Director

NGU Homelettings