The dictionary defines the word inventory as meaning ‘a detailed list of objects in a particular place’, but those letting agents and landlords that have had the unfortunate experience of losing out in a deposit dispute know that it should mean much more than that.

Since the introduction of Tenancy Deposit Protection on 6th April 2007 any dispute over the return of a tenants’ deposit, which cannot be settled between the landlord and tenant, must be referred to the scheme under which the deposit is held for alternative dispute resolution (ADR).

The process involves an independent adjudicator reviewing the evidence that has been submitted by both the landlord and the tenant. the Adjudicator then makes a judgment on how much, if any, of the deposit should be returned to the tenant. Failure to provide comprehensive evidence will almost inevitably result in the landlord losing the dispute.

A tenant can raise a dispute with the appropriate scheme without incurring any cost whatsoever; one of the main principles of ADR is that there is no charge (to the tenant) so it is available to everyone. It is therefore critical that landlords are properly protected when renting out property furnished or unfurnished, as failure to do so could be very costly, should a dispute arise.

Recent reports in the press show that the number of cases being referred to tenancy deposit protection schemes for ADR has increased far beyond the expected levels. The fact that this has occurred during a period of recession when many people are facing a squeeze on their finances may be coincidental; however, the trend looks set to continue.

EVIDENCE EQUALS PROTECTION

In the event of a landlord wanting to withhold some or all of a tenant’s deposit it is incumbent upon them to provide the evidence, so in a worst case scenario, if the tenant had damaged the landlord’s property but the landlord was unable to supply evidence to support the original good condition of the property or item then they would lose the dispute and the deposit would be repaid to the tenant.

The tenancy agreement sets out the terms of the tenancy, but it is the inventory and schedule of condition that sets out the condition of the property, its contents, fixtures and fittings. If no written tenancy agreement is provided, in the majority of cases, the agreement will default to an Assured Shorthold Tenancy, if no written inventory is provided then, for the landlord, there is no such luxury as default protection.

Having an inventory should not be an option – it is however, the quality of the inventory that will make the difference in the event of a dispute.

Timing is very important; the inventory should be created when the property is ready to be let but before the tenant moves in. This can sometimes entail the inventory provider visiting the property the day before ‘check in’ to make sure that they record the property as it was at the time the tenant takes occupation.

The inventory will record all the items at the property, so if any are to be removed or anything is to be introduced, such as a new washing machine, this should all be done before the appointment is made for the inventory to be created.

THE IMPORTANCE OF DETAIL

The descriptions contained in a ‘perfect’ inventory must be detailed, for example ‘a light’ does not explain the type of fitting, if it is freestanding or fixed, if it has a bulb, all of which become relevant if compensation is sought for damage to the light.

A common mistake is to record ‘a door’ with no mention made about the door furniture. If a tenant decides to remove the china doors handles, collars and finger plates from each door in the house the replacement cost could quite easily run into hundreds of pounds. If they are not recorded on the inventory then no evidence can be provided that they even existed at the start of the tenancy.

Other similar but less expensive omissions include the sprung inserts in toilet roll holders or removable grill panhandles. All need to be paid for if they are missed or go missing.

The vast majority of disputes arise over cleaning issues. “It’s cleaner than when I moved in” is often the cry of a disgruntled tenant and in some cases can be true.

Cleaning is subjective what is clean to one person might not be clean to another. The inventory removes this subjectivity; it will record the cleanliness of the property in a factual way. If there is dust on the top of the skirting, or the extractor hood is sticky to touch it will say so for all to see, both at the beginning and end of the tenancy.

THE FORMAT

The inventory must be a simple to use document, one that can be navigated around easily, written and produced in a user friendly way. With the amount of detail that is required it can easily become unwieldy so it is important that the format is carefully considered.

The inventory should, (like the song in the Sound of Music!) start at the very beginning; for a house this might be the front gate and path, for an apartment it might be the front door. Each room or space in the property should follow the same sequence for example:

• Doors
• Walls
• Ceiling
• Woodwork
• Flooring
• Windows
• Poles and window dressings
• Heating
• Lighting
• Additional items, plugs, sockets etc
• Furniture and furnishings

Each item recorded on the inventory should be numbered, thus producing a document that flows from beginning to end and is simple to use when trying to find an item, no matter how small.

Terminology is another important feature of a ‘perfect inventory’ standardised phrases for common items can help speed up the process of recording the inventory:
‘White UPVC double glazed window with integrated lever locking handle and 1 key’

Abbreviations may be used but should be kept to a minimum as they require the reader to continually refer to a key containing the expanded definitions.

The perfect inventory is detailed, concise but always easy to use even if the reader did not produce it.

Digital photography provides an excellent back up to a descriptive inventory but pictures are not a substitute for the written word. There are many times a photograph will fail to show a hairline crack in a white china wash basin or a rub mark on a magnolia wall. Photographs are excellent for showing the condition of the gardens or grounds of a property; it is simple to see if the grass needs a cut or the hedges need trimming.

TERMS, SYSTEMS AND RECORDS

As with the letting agents’ terms of business, the inventory should have a set of terms attached to it which will explain the scope of the document, precisely what it will comment on and, indeed, what it will not. Lofts and cellars are areas that inventory providers will not go into, for good reason, appliances will not be tested, mattresses not lifted. These are all important points that should be clearly stated on the inventory.

Fire safety devices should be clearly marked on the inventory but comments about testing them and whether they are working accurately during the visit should be very carefully considered. The test of a smoke alarm is to blow smoke into it – which is not practical to do.

It is also important that keys are recorded clearly stating the number and which locks they fit. Instruction manuals should also be listed stating which appliances or fitments in the property that they relate to.

Each page of the inventory should have a space for the tenant to initial and a signature page should be included at the end of the inventory stating that all parties are happy with the document and find that it is a true depiction of the property and its contents at the time it was created.

The check in, mid term visit and check out reports are also vital if a comprehensive job of protecting the landlord’s interests is to be carried out. Again these documents should always be detailed and clear in their presentation and, of course, easy to use.

WHO TO USE?

Careful consideration should be given to whether the inventory is produced in-house or by a third party provider. There is currently no requirement to use a third party, although as a general point it makes good sense to use a provider who is impartial, who has no involvement and can produce a factual report.

There are no exact figures produced of the number of inventory providers in the UK, the two main trade associations APIP (The Association of Professional Inventory Providers) and AIIC (The Association of Independent Inventory Clerks) have hundreds of members listed on their sites but there is no requirement for an inventory provider to register.

If a third party provider is to be used, make sure they have professional indemnity and public liability insurance and are a member of one or other of the professional bodies and, therefore, abide by its code of practice.

Producing the ‘perfect’ inventory takes skill, time and care and it is usually best left to a professional, insured, third party provider. More so now than ever, the professional inventory and schedule of condition will help to protect the landlord if it comes to the point where they are claiming for damage, loss or maybe just the costs of cleaning the property at the end of the tenancy. For those that still wish to do it themselves, remember if it’s not on the inventory it doesn’t exist!

Tim Wakelin FNAEA MAPIP is a Partner at Inventories Inc a specialist provider of inventory services covering West Sussex, Hampshire, Cambridgeshire, Middlesex, Hertfordshire and Buckinghamshire. http://www.inventoriesinc.com/