Buy-to-let wear and tear allowance: all you need to know as a landlord

Updated for 2018

If you’re a landlord, wear and tear is an inevitable part of property maintenance.

Whether it’s scuffed walls and worn carpets or irreparable damage to your furniture and fittings, when a tenant checks out there’ll always be something to deal with.

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And you'll need more than our rental property maintanence tips - a sound knowledge of wear and tear rules will stand you in good stead when the inevitable occurs.

With all the changes to the rental property market coming through at the moment, here’s our guide to what counts as normal wear and tear and how you claim for those charges under the government’s new system.

What is normal or reasonable wear and tear?

Wear and tear is one of the biggest causes of disputes between landlords and their tenants. Under UK law, a tenant should not be charged for “normal wear and tear”, but what is normal when it comes to wear and tear?

According to the Association of Independent Inventory Clerks (AIIC) the rule of thumb is that a tenant cannot be held responsible for damage caused by ‘reasonable use of the premises and the ordinary operation of natural forces’.

So what does this mean? Well, when a tenant checks out, they can’t be charged for any damage that comes about just through living in the property - the worn carpets and scuffed walls end of the spectrum.

However, as soon as you cross into the realm of blu-tac or pin marks and stains on carpets or furnishings, you can start charging your tenant for wear and tear, which will be subtracted from their deposit before it’s returned.

The other things to consider are how long the tenant has lived in the property and the condition it was in when they arrived. A tenant who’s been in a property for 10 years is going to have caused more wear and tear than one who only stays for six months.

When it comes to original condition, if, for example, the carpet already had a few stains when the tenant arrived, you can’t then charge them for a full carpet clean or new carpets when they leave.

What happens if a tenant disputes my claim?

Unfortunately, tenants tend to have a rather different view of what counts as 'normal wear and tear' and, more importantly, courts tend to rule in their favour. When deposit disputes are overseen by an independent adjudicator, the tenant wins in approximately 90% of cases.

So what can you do to prevent this from happening? The best option is to keep a very thorough record of the property’s condition at the start of a tenancy by having a comprehensive inventory and implementing a thorough check-in and check-out policy. Make sure you take photographs!

If the tenant signs the inventory, there can be no argument about missing or damaged furniture and fittings when it comes to check-out.

While some tenants won't want - or be able - to be present during the check-out process, if they can be there then you stand a better chance of easily resolving minor disputes on the spot rather than through a lengthy and potentially expensive court case.

Changes to wear and tear allowance

After its announcement in the Autumn Statement in 2015, 2016 saw the introduction of a major change to if and how landlords can receive reimbursements for the cost of wear and tear. As of April 2016, landlords can only claim for wear and tear costs they have actually incurred.

As things stood before, landlords were allowed to deduct an annual allowance for wear and tear from their taxable profits. Now you will have to provide itemised receipts if you wish to have the costs deducted from your tax.

The government’s website has an overview of the changes, stating “The relief given will be for the cost of a like-for-like, or nearest modern equivalent, replacement asset, plus any costs incurred in disposing of, or less any proceeds received for, the asset being replaced.”

How to calculate wear and tear - the Replacement Relief

The new wear and tear allowance rules came into force on 6 April 2016, and they're known as the Replacement Relief. The new relief applies to all rented properties, whether furnished or unfurnished.

Landlords can now claim the cost of a replacement item, with a maximumum value of a modern equivalent in the event that the new item is an improvement on the old one. Relief is also offered on the cost of disposal of the old item and installation of the new one. From this total you must deduct any cash or payment in kind received for the old item.

Much like with business expenses, it's important to note that relief is only available on items that are provided for the sole use of the tenant. In addition, you should note that the Replacement Relief is not available to properties on which you're claiming under the Rent-A-Room scheme.

The tenant fees ban and wear and tear

Landlords should also be aware of the forthcoming introduction of a tenant fees ban. Contained in the Bill passing through Parliament is a limit on the deposits that landlords can take - once the Bill is passed, deposits will not be allowed to exceed six weeks' rent. You should bear this in mind when considering disputes over what constitutes wear and tear and what is actually damage, bearing in mind your new legal obligations.

Do you think the Replacement Relief is fairer than the old wear and tear allowance? Let us know in the comments section below.