Buy-to-let 101: Property inventories, inspections, and deposit disputes

Inspect regularly and comprehensively to avoid deposit disputes

Your tenant leaves. You inspect the property. It’s a mess. Literally. Dog mess has ruined the carpet. Cupboard doors are hanging off. The furniture is damaged beyond useless. Luckily, the deposit will cover the costs. But the tenant disputes your claim. In adjudication, the case goes against you. This is every buy-to-let landlord’s nightmare. It’s also one that is easily avoided. Savvy landlords sleep easy at night. They never worry about such a nightmare scenario. Why? Because they understand the relationship between property inventories, property inspections, and tenant deposit disputes.

The property inventory is the proof an adjudicator needs

If you must go to adjudication over a tenant’s deposit, the property inventory is one of your most powerful tools. In fact, without it, you are likely to lose your claim. If you plan to claim on your landlord’s insurance, the likelihood is that they will insist on seeing an inventory, too. Without an adequate property inventory, you are more likely to find yourself out of pocket should you suffer from a nightmare tenant.

What makes a good property inventory?

A property inventory should detail everything about the premises and its condition. This includes:

• Items in the property
• Age of items in the property
• The condition of those items
• Quality of décor, fixtures and fittings

It should include all these details for both the interior and exterior of your property. You should include both a written and photographic description of every aspect of your property and item included when letting. A good idea is to also include video evidence. The inventory should be signed and dated by both you (or your representative) and the tenant. It should be signed on every page. This could be a document that is used as legal evidence in a dispute, so you had better make it comprehensive, clear, and professional.

When should the property inventory be made?

The property inventory should show how the property was when the tenant first moved in. But here’s the thing: most damage occurs when a tenant is moving in! So, to make sure that your property and possessions are protected against this initial accidental damage, you should complete the property inventory before the tenant moves in and then walk through it with them immediately before they move in. Walk through the property room by room (organising the inventory on a room-per-page basis is a good idea), and have the tenant sign off as you go. You can make necessary adjustments while working in this way (take your camera with you). Once the inventory is agreed and signed, only then should you hand the keys to the tenant and welcome them to their new home.

Why you should carry out regular inspections

Regular inspections work together with the property inventory to protect you against a nightmare tenant. Each inspection provides you with the opportunity to ensure that:

• Your property is being cared for
• There are no changes to the people living in the property
• Any minor maintenance or repair issues are dealt with early

When conducting the inspection, you should refer to the property inventory for signs of damage or neglect. Issues can be raised with the tenant, and far more easily satisfied than they are at the end of a tenancy. The property inventory should be updated and signed in full as it was on the first day of the tenancy.

How often should a property be inspected?

We would recommend at least every six months, and preferably every three months from the start of the tenancy. Remember, though, that you cannot enter the property without the tenant’s permission – even though it is your property, it is the tenant’s home. Always give at least 24 hours’ notice of an inspection.

What about when the tenant wants to leave?

When the tenant wishes to leave, you should write to them to remind them of their responsibilities upon departure. You should expect the property to be returned to you in the same condition as it was when the tenancy started (save for natural wear and tear). When conducting the final property inspection, do so in the presence of the tenant, after they have removed all their belongings from the property. Especially, you should examine:

• Cleanliness
• Damage
• Missing items

Watch for items left by the tenant, and take meter readings. Get the leaving inventory signed by the tenant.

What if you want to make deductions from the tenancy deposit?

It may be that you feel you must make some deductions from the tenant’s deposit. If this is the case, you should work to a formula to calculate what is a reasonable deduction, discounting for reasonable wear and tear. (Read our article “How much of the tenancy deposit can a buy-to-let landlord withhold?” for more info.) To make a deduction, you should notify the tenant of your intention within 10 working days, and send a full schedule of costs within 28 days of the tenant leaving.

What happens if the tenant disputes the deposit deduction?

If the tenant disputes the deduction, you may refer it to adjudication – but only after trying to resolve the dispute. At adjudication, the adjudicator’s decision is final and binding. You should supply evidence that includes:

• Receipts and invoices for work carried out
• Estimates for work needed to be undertaken
• Invoices or proof of purchase of items in the property
• ALL property inspection reports and property inventories

If your evidence is complete and your claim reasonable, the adjudication is more likely to go as you want it to. Then again, if you have carried out comprehensive property inspections combined with updating property inventories, you will be less likely to

1. Need to withhold some of the deposit
2. Be challenged by the tenant

To find out how we conduct our property inspections and inventory checks, call one of the Ezytrac team today on +44  01522  503  717. Live with passion, Brett Alegre-Wood