A comprehensive inventory is one of the most important tools in any landlord’s arsenal. Along with a properly drafted contract and an efficient screening process for potential landlords, this simple document should form the bedrock of your working practices.
The inventory provides details of the contents of your buy-to-let property and contents, as well as the condition of the property itself. If there is a chip on the wall or a stain on the carpet, this will be noted on the inventory. An inventory should be made by a landlord at the start and end of every tenancy, even if the property is unfurnished.
Why you need an inventory
When a new tenancy begins, it is important that both you and the tenants have a detailed idea of the contents and condition of the property. Both parties will need to know what is in it, often down to details like light fittings and door handles. Similarly, you should both be aware of any damage to the property before the tenant moves in.
At the end of a tenancy, the inventory will become very important. When the tenant moves out, you will carry out a ‘check-out’ inventory, during which you will note any changes between the current state of the property and the state in which it was provided to the tenant. The tenant will almost certainly have a contractual obligation to leave the property as they found it, excepting reasonable wear and tear. The inventory can therefore be thought of as a mandate provided to you in the event that you need to make deductions from the tenant’s deposit.
When to make an inventory
An inventory should be made before the tenant moves in, and as they are moving out. It should always be conducted when the tenant is present, as both parties will need to agree on what is being written down.
The check-out inventory should be completed after the tenant has moved their own possessions out of the property, in order to ensure that you can get an accurate view of any damage. Most landlords choose to do this on moving-out day, as it can be difficult to get tenants to return to the property after this date.
If you have contracted with a lettings agent or property manager, they will probably arrange for someone to come and conduct the inventory for you. Most private landlords, on the other hand, choose to carry out the task themselves. However, if you are a private landlord it is worth considering finding a qualified professional to do this. There have been cases in the past where a disputed inventory has been disregarded by a judge, and the deposit repaid in full to the tenants, because the landlord was not deemed to be qualified to prepare such a document. This is, however, a very rare occurrence.
What should the inventory include?
The inventory should be as comprehensive as possible, and should include details of anything that you will be leaving in the property. If it is furnished, this can mean you end up with a very long document. Even if it is unfurnished, you should ensure that you make detailed notes of any existing damage, right down to chips in the paintwork. Depending on your arrangement with the tenants it may also be necessary to make a note of meter readings when the tenancy begins.
You may wish to take photographs to accompany the inventory, and savvy tenants may do the same. This helps to avoid disagreements on moving out day. You should also ensure that the document is signed by both you and the tenant, and that a copy is retained by both parties. If any additions or changes are made, these should be agreed and initialled by both you and the tenant.
What if there is damage at the end of the tenancy?
If you wish to make deductions from the tenant’s deposit because of damage to the property, the inventory will be crucial. Given that the tenant will have agreed to and signed the initial inventory, any discrepancies between this document and your check-out inventory are potentially chargeable to the tenant.
Of course, there are occasions on which there will be disagreement between landlord and tenant, either about deductions or about the inventory itself. The Alternative Dispute Resolution (ADR) process is designed to help in these situations. ADR provides a means for landlords and tenants to have disputes adjudicated over, and of ensuring that deposits are dealt with fairly. Look out for more information on ADR in a forthcoming article.
It is also vital that you are properly insured, in order to minimise the financial cost of any damage to your property. You should make sure that you have a suitable building and/or [/landlord-insurance/content-insurance/) policy, under a special [/landlord-insurance/) policy. It is also worth noting that your own landlord policy will not cover your tenants’ possessions; instead, they will need to take out their own, separate contents insurance policy.
A comprehensive inventory, agreed by both parties, is one of the most important tools at your disposal. Make sure that you take the time to draw this document up properly, in order to avoid lengthy and potentially costly conflict at a later date.